Ryuu96 on 12 June 2023
This is just me speculating with the info that we have. So, I could be totally wrong.
I think that once the EC approved the acquisition (today just 4 weeks ago) and then China too, MS had 3 main issues to close the deal:
- CMA (the block)
- FTC (the administrative process)
- ABK (the outside date)
All of them are in some way interconnected. Therefore, fixing one could solve or help the other two.
The first one to address was the CMA. After all, it has been the stopper since September 2022 and the appeal process required to move fast. They got a shorter process than expected but it wasn’t probably enough for them (it requires to extend the merger agreement no matter what). In parallel, MS tried to lobby the CMA and the UK government, but just the week before those meetings we got a leak suggesting that MS was exploring ways to close over UK (not a bad way to pressure them).
In any case, I don’t think that those meetings were successful for MS. The CMA is very hard to pressure that way and we only got silence during the week (I think that in this case silence meant bad news because Brad Smith complaining again about the UK wouldn’t have helped in any way).
However, maybe those meetings were in part successful because they created the impression that MS was serious about the possibility of closing without UK. Although I would love to see that happening from a legal perspective :p xD, I don’t think that MS will pull the trigger. However, creating a reasonable doubt could be more than enough (for example, the statements from Satya Nadella about not closing the door to leave the UK).
What brings us to issue number 2: the FTC.
Once MS saw that the CMA issue couldn’t be addressed fast enough, the alternative was accelerating the process with the FTC to corner the CMA. Specially now that they had created the impression that they could close over them.
The FTC didn’t have any reason to file an injunction now. Unless they were forced to do so because they really believe that MS could close the acquisition over the CMA. Reading the transcript of the first CMC I thought that it was strange how many times MS insisted in the idea that they could close in the US whenever they wanted. In fact, when the CMA argued that the the hearing should be in autumn because they weren’t the real obstacle (meaning that the FTC was), MS denied that by saying that they could close right now in the US if they wanted.
And I think that this is what‘s happening right now: MS is trying to force the hand of the FTC, hoping for a win that if it happens, could make the CMA really an outlier (supposing that everyone else approves it). They could make that happen really fast, because urgency is key right now. Specially if ABK (the third issue) is not going to be in the mood for much longer in this whole thing.
Then, if MS succeeds against the FTC, the CMA could be the only one opposing the acquisition. In that case, arguments about irrationality or comity get reinforced. Maybe so much that the CMA would prefer to settle before a loss that could be costly.
Accelerating the FTC issue now to corner the CMA could also solve the ABK issue about timing, because if MS is lucky enough they could close before the original outside date or just extend the merger agreement for short period of time (1 to 3 months).
It’s a risky move, but it could work.
As I say, this is just my speculation and could be totally wrong. But I think that it’s one way to read what has been happening during the last 3-4 weeks.
I think that once the EC approved the acquisition (today just 4 weeks ago) and then China too, MS had 3 main issues to close the deal:
- CMA (the block)
- FTC (the administrative process)
- ABK (the outside date)
All of them are in some way interconnected. Therefore, fixing one could solve or help the other two.
The first one to address was the CMA. After all, it has been the stopper since September 2022 and the appeal process required to move fast. They got a shorter process than expected but it wasn’t probably enough for them (it requires to extend the merger agreement no matter what). In parallel, MS tried to lobby the CMA and the UK government, but just the week before those meetings we got a leak suggesting that MS was exploring ways to close over UK (not a bad way to pressure them).
In any case, I don’t think that those meetings were successful for MS. The CMA is very hard to pressure that way and we only got silence during the week (I think that in this case silence meant bad news because Brad Smith complaining again about the UK wouldn’t have helped in any way).
However, maybe those meetings were in part successful because they created the impression that MS was serious about the possibility of closing without UK. Although I would love to see that happening from a legal perspective :p xD, I don’t think that MS will pull the trigger. However, creating a reasonable doubt could be more than enough (for example, the statements from Satya Nadella about not closing the door to leave the UK).
What brings us to issue number 2: the FTC.
Once MS saw that the CMA issue couldn’t be addressed fast enough, the alternative was accelerating the process with the FTC to corner the CMA. Specially now that they had created the impression that they could close over them.
The FTC didn’t have any reason to file an injunction now. Unless they were forced to do so because they really believe that MS could close the acquisition over the CMA. Reading the transcript of the first CMC I thought that it was strange how many times MS insisted in the idea that they could close in the US whenever they wanted. In fact, when the CMA argued that the the hearing should be in autumn because they weren’t the real obstacle (meaning that the FTC was), MS denied that by saying that they could close right now in the US if they wanted.
And I think that this is what‘s happening right now: MS is trying to force the hand of the FTC, hoping for a win that if it happens, could make the CMA really an outlier (supposing that everyone else approves it). They could make that happen really fast, because urgency is key right now. Specially if ABK (the third issue) is not going to be in the mood for much longer in this whole thing.
Then, if MS succeeds against the FTC, the CMA could be the only one opposing the acquisition. In that case, arguments about irrationality or comity get reinforced. Maybe so much that the CMA would prefer to settle before a loss that could be costly.
Accelerating the FTC issue now to corner the CMA could also solve the ABK issue about timing, because if MS is lucky enough they could close before the original outside date or just extend the merger agreement for short period of time (1 to 3 months).
It’s a risky move, but it could work.
As I say, this is just my speculation and could be totally wrong. But I think that it’s one way to read what has been happening during the last 3-4 weeks.
