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Ryuu96 on 12 July 2023
The scenario is broadly this:
1. The CMA still have in place an interim order that prevents Microsoft from acquiring ABK. Microsoft could, in theory, waive the conditions re consent by the CMA in the merger agreement (along with others) with ABK and consummate the merger but doing so would be in contravention of that order, which renders them open to fines and the CMA pursuing injunctions and/or other relief.
2. In the interim, the CAT litigation is paused (pending CAT consenting, which they will) whilst the CMA and Microsoft consider a restructuring of the deal that Microsoft hopes will assuage CMA concerns. That restructure is potentially early given the CMA’s PR statement earlier today. Whatever Microsoft offer will need a further investigation by the CMA, albeit I’d expect that to be on a fairly expedited timeline.
3. Ancillary to all of this is the July 18th date under the merger agreement. This is not a long-stop or DD provision i.e. it does not automatically terminate the merger of completion has not occurred by then. Rather, it means that after that point, ABK could unilaterally terminate the agreement and walk away with the 3bn.
What happens next is unknown - I would think it quite unlikely Microsoft are going to close over any order of the CMA that prevents them from completing the merger. That likelihood is decreased given the two have agreed to pause the litigation.
I also find it unlikely ABK will walk away post-July 18th where the CMA proposal is still ongoing, given that, whilst the CMA block is significant, it is at present the only element preventing consummation of the merger. I’d expect the board to continue acting in the best interests of their shareholders and complying with their obligations under the merger agreement in order to try and finalize and close the deal when possible. However, I can’t know for certain what ABK are thinking!
Hope that helps.
1. The CMA still have in place an interim order that prevents Microsoft from acquiring ABK. Microsoft could, in theory, waive the conditions re consent by the CMA in the merger agreement (along with others) with ABK and consummate the merger but doing so would be in contravention of that order, which renders them open to fines and the CMA pursuing injunctions and/or other relief.
2. In the interim, the CAT litigation is paused (pending CAT consenting, which they will) whilst the CMA and Microsoft consider a restructuring of the deal that Microsoft hopes will assuage CMA concerns. That restructure is potentially early given the CMA’s PR statement earlier today. Whatever Microsoft offer will need a further investigation by the CMA, albeit I’d expect that to be on a fairly expedited timeline.
3. Ancillary to all of this is the July 18th date under the merger agreement. This is not a long-stop or DD provision i.e. it does not automatically terminate the merger of completion has not occurred by then. Rather, it means that after that point, ABK could unilaterally terminate the agreement and walk away with the 3bn.
What happens next is unknown - I would think it quite unlikely Microsoft are going to close over any order of the CMA that prevents them from completing the merger. That likelihood is decreased given the two have agreed to pause the litigation.
I also find it unlikely ABK will walk away post-July 18th where the CMA proposal is still ongoing, given that, whilst the CMA block is significant, it is at present the only element preventing consummation of the merger. I’d expect the board to continue acting in the best interests of their shareholders and complying with their obligations under the merger agreement in order to try and finalize and close the deal when possible. However, I can’t know for certain what ABK are thinking!
Hope that helps.
