Last night was, by most accounts, a brilliant night for Microsoft (NASDAQ:MSFT). Its Summer Game Fest showcase concluded and delivered a string of exciting titles to come, many of which will appear by the end of this year. But the morning after proved a little bit of a buzzkill, as the Federal Trade Commission (FTC) stepped in to announce it was leveling a lawsuit to stop Microsoft’s acquisition of Activision-Blizzard (NASDAQ:ATVI).
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The FTC was set to seek a preliminary injunction that would halt the acquisition. With the deal set to terminate on July 18, Microsoft will be left to either walk away, renegotiate, or just extend the current deal. Though if Microsoft does move to extend the merger, according to David Faber with CNBC, the move will simply cost Microsoft more than the $69 billion it’s set to pay already.
The FTC has not been friendly to this deal largely since its inception. It already brought one suit before its own internal judge, which isn’t set to even start until August. There’s also an appeal set to go before authorities in the UK, as its Competition and Markets Authority is poised to block the merger as well. In fact, a recent Seeking Alpha report noted that Microsoft was already trying to find an end-run around the U.K. regulators’ harsh stance on the matter. Now with the U.S. turning on it as well, this could mean larger problems ahead.
Despite this, Microsoft is still a winner as far as analysts are concerned. With 30 Buy ratings, four Holds, and one Sell, Microsoft stock is considered a Strong Buy. With an average price target of $345.45 per share, however, it offers little upside potential.
