(Bloomberg) -- Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. looks set to clear its final regulatory hurdle after the UK competition authorities signaled they will accept the latest concessions, ending a wait of more than a year and a half to complete the biggest ever gaming deal.

The Competition and Markets Authority said Friday that Microsoft’s proposal opens the door to the deal being cleared. The restructured offer to sell some gaming rights to French publisher Ubisoft Entertainment SA. is expected to keep competition in cloud gaming open for years, the regulator said. It will consult on the offer until Oct. 6.

The move represents a stunning turnaround for a deal that was once thought over after running up against concerns from antitrust regulators including an initial veto from the UK in the spring. It gained unexpected momentum after Microsoft beat the Federal Trade Commission’s court challenge over the deal. The European Union cleared the deal with behavioral remedies in May. That left the CMA as the remaining regulatory hurdle.

“This is a new and substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft,” said Colin Raftery, a senior director of mergers at the CMA.

Activision’s shares rose as much as 2.2% to $94.39 in US premarket trading on Friday, just 61 cents away from Microsoft’s $95 a share offer. Ubisoft’s shares climbed as high as 4.2% in Paris.

The deal provides Xbox chief Phil Spencer the cornerstone to a plan to boost Microsoft’s lagging mobile games business, albeit months later than the company had hoped. Spencer must now execute on a strategy he unveiled around the deal in a landscape where the market has shifted, including the receding focus on the metaverse, which Microsoft originally listed as a driver of the acquisition.

Activision Nears Microsoft Offer Price as UK Approval in Sight

The CMA’s approval came with a warning to other would-be acquirers not to delay offering concessions.

“It would have been far better, though, if Microsoft had put forward this restructure during our original investigation,” the CMA’s chief executive Sarah Cardell said. “This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time.”

The CMA had previously vetoed the deal, saying it could result in higher prices, fewer choices and less innovation for UK gamers. The new offer means Microsoft can’t limit access to Activision’s key content to its own cloud gaming service or withhold those games from rivals, the regulator said.

“The parties have arguably gone further in the UK to secure regulatory clearance than elsewhere,” said Alex Haffner, a competition lawyer at UK law firm Fladgate.

Still, the UK watchdog’s turnaround allowed the CMA to “climb down from an isolated position in regard to the other two regulators,” said Jonathan Compton, a dispute resolution and antitrust lawyer at DMH Stallard.

“In effect, the substance of the structural change is that Microsoft will not buy the rights to the cloud gaming rights owned by Activision,” he said. “This is, with respect, a fig leaf.”

Microsoft executive Brad Smith said the firm will continue to work toward winning final approval to close the deal by Oct. 18.

“We are encouraged by this positive development in the CMA’s review process. We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming,” he said. 

The CMA’s preliminary approval of our merger” is critical to completing the deal,” Activision Chief Executive Officer Bobby Kotick wrote in a blog post.

--With assistance from Stephanie Bodoni and Samuel Stolton.

(Updates with lawyer comments from tenth paragraph.)

©2023 Bloomberg L.P.