WHEN: Today, Tuesday, July 11, 2023
WHERE: CNBC’s “The Exchange”
Following is the unofficial transcript of breaking news from CNBC’s David Faber on “The Exchange” (M-F, 1PM-2PM ET) today, Tuesday, July 11. Following is a link to video on CNBC.com: https://www.cnbc.com/video/2023/07/11/judge-strikes-down-the-ftcs-effort-to-block-microsoft-activision-merger.html.
All references must be sourced to CNBC.
KELLY EVANS: Wait, let’s bring in David Faber. David with a better explanation for why Activision shares are now pretty much at session highs.
DAVID FABER: Yeah, well, they very well may be at $95 a share because I think it looks increasingly likely that Microsoft’s gonna be able to close this transaction as soon as Monday of course and prior to the expiration of the merger agreement between the two parties which is July 18. Kelly, it’s really stunning in fact I termed this deal mostly dead some time back when the UK’s CMA had issued an objection to the transaction. But it is very much alive right now and let me give you some latest color that I’ve been able to pick up in terms of reporting around the CMA process. Of course, you were just speaking with Steve about this big loss for the FTC in court in San Francisco and that will allow Microsoft to move ahead with closing the transaction because there was no preliminary injunction issued as of course the FTC wanted there to be but the CMA has remained the key stumbling block having already issued its objection to the transaction. That said we got interesting commentary from both the CMA and Microsoft a couple of hours ago indicating the two sides were in conversations essentially to try to restructure the transaction so that would meet the objections of the CMA and therefore go to close and what I have learned is that Microsoft has offered what I’m told is a discrete small divestiture, unclear exactly what that is, that will in fact satisfy the CMA or at least they believe it will satisfy the CMA. You know, we can all speculate about some sort of a licensing deal for the cloud and other things that may occur here but again, a small and discreet divestiture is what I’m hearing, all of which would seem to put this on a path Kelly amazingly enough to actually be closed at $95 a share in cash, the price agreed to when this deal was announced back in January of 2022 despite what were numerous hurdles that were put in its way so we’ll see that stock will probably continue to maintain a very close now range to that $95 a cash deal price. And again, we could be in line here for a close as soon as let’s call it Monday prior to the expiration of the merger agreement between the two parties.
EVANS: Wow. David, I’m curious how this is already reverberating throughout the deals’ community where if it had if the FTC had been successful, there was probably a sense that would chill deal making even more than what we’ve seen already from companies who just don’t want to have to put up with the cost and duration of that fight. Now that Microsoft has prevailed in an expedited five-day trial, what does that mean for people who might look and say, okay, well, not only is this moving forward, but maybe now we as competitors have to scramble to make sure that we have a place within the world of tech gaming or other industries?
FABER: Yeah, I mean, you know, I said this many times, of course that the case in San Francisco is probably even more important for the FTC than for Microsoft in part because it wouldn’t mean that Microsoft could just close the transaction given the objections of the CMA which we’ve been discussing. And you’re right, there has been a chilling effect from the FTC and the DOJ being far more aggressive than their predecessors in stopping certain deals that in the past had not seen, been seen as anti-competitive. And so this loss coupled with by the way loss about a month ago a Spectrum Brands transaction they also lost the FTC did in court. Horizon, Amgen, many people have significant questions about whether the FTC has a real chance prevailing there, most don’t believe it does. So you’re right, Kelly. This conceivably will send a more positive message to those who would be considering doing a transaction that said, if you still continue to have a very aggressive FTC and DOJ with even the possibility of being brought to court despite the fact that they may not have a great case and you can win, timing is still something you’re going to consider because few companies want to take on as Microsoft has here, an 18-month process to get your deal done. But there is no doubt that the FTC is lost in court today is a significant blow to the agency’s approach to mergers and it’s hope to really put I think many deals that it sees as anti-competitive aside.
EVANS: David, thank you very much.
