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Arbitrageurs were delighted last week when a federal judge rejected the FTC’s request to block Microsoft’s massive $69 billion acquisition of Activision Blizzard (ATVI). By the end of the week, the 9th Circuit Court of Appeals denied the FTC’s request to temporarily block the deal. The stock, which had oscillated between $75 and $85 for much of the time since the $95 deal was announced, jumped to just over $90 a share. In after-hours trading on Friday, it spiked to $93.10.
Subsequently, Microsoft signed a 10 year agreement with Sony guaranteeing the availability of Call of Duty on the Playstation platform. Microsoft Vice Chair Brad Smith had often joked that he carried around the agreement in his pocket in case Sony changed its mind and wanted to sign the agreement.
The last hurdle for the deal is the U.K.’s Competition and Markets Authority (CMA), with an appeal hearing scheduled on Monday. We have written about the deal multiple times in the past, including a decision to exit the deal earlier this month after the spread narrowed considerably. The ruling by both the federal judge and the appeals court were a triumph for rationality, the kind that was not afforded to investors of numerous other companies subject to a merger like Rite Aid and Office Depot.