Machiavellian said:
This does not make sense to me. If there is a breakup fee at a certain point in time and that time expire why would they get sued for taking advantage of their option. There is nothing and I mean nothing holding ABK from terminating this deal besides that they feel that its going to go through and MS offer the best deal they can get at this time. If ABK feel they could get a better deal, I am sure they would vote 98% on that deal because at the end of the day its all about the money. ABK is no more beholden to continue to go along with this deal unless the ability for success is much better than any other option that could come along. None of what you say makes sense because the whole point of having a termination fee and both parties can walk away after that date passes is exactly the reason you state. Anything before that date, yes, ABK could get sued, anything after that date, ABK can do whatever they like. MS would not be pushing for a new deal unless they wanted to make sure to avoid that situation where ABK could just quit anytime between now and when MS or even ABK feel the CMA would finalize their decision. Now do I believe the deal is happening yes, but that does not mean some BS could crop up and the scenario I put out there could not happen. As far as shareholders are concerned is not who purchase ABK, its how high of a value they can get for their money. |
They have a legal responsibility to do everything they can which is in the shareholders best interest. Shareholders best interest right now is this deal going through. If they quit now, when the valuation is at $90+ a share, and tank the valuation back down to mid 70s, right at the final hurdle, then Activision's CEO and Board have caused damaged to shareholder value which was easily unavoidable.
The company has to answer to its shareholders and they don't get that $3bn. The valuation loss would far exceed the $3bn that Microsoft gives them and that affects every single shareholder. There is therefore a legal responsibility holding Activision back from terminating the deal and a financial one, it is in their best interest to extend the deal at this stage of the game rather than taking $3bn but tank their company value.
Activision "feeling" they can get a better deal is irrelevant to shareholders, they would need proof, they would need to show they have a better deal, not just words, it would have to be backed up by action and proof. They can't just be like "oh, we might get a better deal so for now, all of you will have to suffer incase we maybe get a better deal"
And right now the odds of them getting a better deal are slim to none. They need to find a company that not only has the money to outbid Microsoft at $95 a share, but also one which is even interested and one that also wouldn't face regulatory scrutiny for another 6-12 months. There are few companies who match that criteria and they'd need that offer now, not later.
It'd likely have to be a decent outbid too, I don't think another company could simply do $96 a share versus Microsoft's $95 a share because Microsoft's current offer will almost certainly be wrapped up next month whilst a new offer will be another 6-12 months of regulatory scrutiny, uncertainty and people want to be paid out now.
Not to mention as I said, Activision was acquired during a period of exploding growth and shit interest rates, times have changed and that decreases the amount of suitors even further as to who is willing to spend that much in the current climate. Activision could be acquired for lower, but right now you're asking someone to beat $95 a share, that's a tall order.
Activision-Blizzard has a legal responsibility to do everything in their power to get the deal through, the termination fee has specific reasons however as to how either side would be paid out and that's usually if there's no path forward for the deal. Now that the timeline is about to be met, they'll be no restrictions and Activision can back out for any reason.
Your mistake here is treating today as if things were a few months ago when Activision's stock was nowhere near Microsoft's offered price and they had multiple block attempts against them, if the deadline had passed then, maybe we would see Activision stop because the share price wouldn't drop so hard and they could be more justified with the CMA/FTC blocks against them.
However things are far different now, the stock price is at $90+ now because the vast majority of shareholders now believe this deal is going through, they're right at the finish line, this deal will pass in either July or August, everyone can see that but they couldn't a few months ago, it makes it a lot harder for Bobby to justify backing out now, $3bn or not.
Last edited by Ryuu96 - on 18 July 2023
