Tencent Gives Blessing to Microsoft-Activision Blizzard Acquisition

Key insights

5 takeaways

01
Tencent Holdings has expressed no objections to Microsoft’s proposed $69 billion acquisition of Activision Blizzard.
02
An undisclosed third party has filed concerns regarding the acquisition with China’s State Administration for Market Regulation (SAMR).
03
Chinese regulators rejected Microsoft and Activision Blizzard’s request for a 'simplified procedure' review, forcing the deal to undergo a more time-consuming standard regulatory process.
04
Sony executives traveled to Seattle to meet with Microsoft regarding a potential long-term licensing agreement for the Call of Duty franchise.
05
The meeting between Sony and Microsoft occurred shortly after the UK’s Competition and Markets Authority (CMA) issued preliminary objections to the merger.

Summary

Tencent Holdings has signaled no objections to Microsoft’s proposed $69 billion acquisition of Activision Blizzard, providing a notable endorsement as the deal undergoes international regulatory scrutiny. While Tencent, which maintains significant stakes in various major gaming entities, supports the merger, the process in China remains complex. The State Administration for Market Regulation (SAMR) declined a request to process the acquisition under a simplified procedure, mandating a more rigorous and time-consuming review process.

The regulatory landscape for the acquisition is further complicated by an undisclosed third party that has formally raised concerns with the SAMR. Although Microsoft is currently navigating challenges from competition authorities in the United States, the United Kingdom, and the European Union, a negative outcome in China would pose a significant threat to its ability to operate within the mainland Chinese market.

Concurrent with these regulatory developments, Sony has taken proactive steps to protect its interests regarding the Call of Duty franchise. Following preliminary objections from the UK’s Competition and Markets Authority, Sony executives traveled to Seattle to engage in direct negotiations with Microsoft. These discussions appear aimed at securing a long-term licensing agreement for the franchise, highlighting the ongoing efforts by major industry players to mitigate the potential market impact of the acquisition. The situation underscores the high-stakes nature of the merger, as both global regulators and industry competitors continue to influence the trajectory of the deal.