Microsoft races for UK compromise to seal Activision deal

One scoop to start: Chip designer Arm is in talks to bring in Nvidia as an anchor investor, while the SoftBank-owned company presses ahead with plans for a New York listing as soon as September.

In today’s newsletter: 

• New life for Microsoft’s $75bn Activision takeover

• Sam Altman’s atom-splitting Spac

• The sandwich shop tied to the Trafigura scandal

Microsoft/Activision: back in play

Many assumed Microsoft’s $75bn pursuit of Activision Blizzard was game over.

But the deal appears to have more lives than players in the video game developer’s Call of Duty franchise. On Tuesday, a US federal judge rejected the US Federal Trade Commission’s attempt to halt the transaction. 

But the real twist came after Tuesday’s US court ruling, when the UK’s Competition and Markets Authority said it was ready to “consider any proposals from Microsoft to restructure the transaction in a way that would address” its concerns.

The UK watchdog had blocked the deal in April on the grounds that it would deter growth in cloud gaming, setting the stage for Microsoft to argue its case in the UK’s appeals tribunal later this month.

Instead, the US tech giant now has less than a week — until July 18, the deadline set when the deal was first announced — to negotiate a compromise with the CMA directly, unless Activision gives it an extension.

The race is on, as there’s no guarantee that Microsoft and the UK regulator can find common ground.

The uncertainty hasn’t deterred investors’ excitement. Shares in Activision, which owns Call of Duty among other top franchises, were up more than 10 per cent at $91 at market close in New York, their closest to the $95-per- share offer price since Microsoft announced its bid in January 2022.

Merger arbitrage traders, who just a few months ago were calling up DD to say the deal was dead, are no doubt also in better spirits.

Less enthused by recent developments will be Joe Biden’s league of trustbusters — including FTC chair Lina Khan — now that a wrench has been thrown in one of the administration’s biggest efforts to rein in dealmaking.

The ruling against the FTC, which has until Friday to appeal against the decision, raises questions as to how Khan and Jonathan Kanter, her fellow enforcer at the US Department of Justice, intend to follow through on their mission to draw a tougher line on antitrust.

Still outstanding are large contested deals, including Amgen’s planned $28bn takeover of Horizon Therapeutics and Pfizer’s $43bn acquisition of Seagen, a specialist in drugs to treat tumours.

Dealmakers had another big win on Tuesday after the Financial Times’ Javier Espinoza reported EU regulators are preparing to clear Broadcom’s $69bn acquisition of cloud software company VMware, causing its shares to rally more than 5 per cent.

The software mega-deal (aka “Project Atlas”) orchestrated by Broadcom’s Hock Tan and PC king Michael Dell could be one of the largest technology deals on record, if reviews by the CMA — which will report its findings in mid-September — as well as by regulators in the US and China break in its favour.

The Spac looking to split atoms

Sam Altman has ties to so many technology businesses, we have to admit we’d forgotten that the OpenAI boss listed a special purpose acquisition company a couple of years ago. 

Altman set up AltC Acquisition Corporation in July 2021 with Michael Klein, the omnipresent dealmaker who was also one of the most prolific Spac sponsors during the coronavirus pandemic-driven boom. 

On Tuesday, barely 24 hours before the Spac’s two-year time limit to find a target was about to expire (which would’ve required it to liquidate and return cash to shareholders), AltC announced it would merge with Oklo. The company, valued at $850mn, will receive $500mn in proceeds from the cash in trust. 

Altman is very familiar with the nuclear fission start-up. He’s one of its early backers and current board chair, which makes things a little awkward when it comes to dealmaking. 

A spokesperson for AltC said Altman had “recused himself from all negotiations between the parties.”

Altman shot to prominence last year when OpenAI rolled out its ChatGPT chatbot and received a major vote of confidence from Microsoft with a $10bn investment. However, he holds no equity in OpenAI — excluding a small stake via Y Combinator from the time he was president — meaning he wouldn’t directly gain from its dramatic increase in valuation. 

The arrangement doesn’t seem to bother him: “I have enough money. I’m going to make way, way more from other investments that I’ve made in the past,” he said at a recent event hosted by Bloomberg in San Francisco. 

Could Oklo be one of them? 

There’s much to do before Oklo’s modular nuclear power generation can become reality, as Lex explains. The most imminent is convincing AltC shareholders that they shouldn’t redeem their cash.

As Spac backers know, that can sometimes prove more difficult than splitting the atom. 

Sandwiches with a side of alleged fraud

Tucked in an alley near Hong Kong’s bustling Tsim Sha Tsui district, Sandwich Hub lures in hungry customers with cheeky signage reminiscent of a certain adult website.

But low-priced Indian fare and salacious marketing gimmicks aren’t the only businesses engaged in by the restaurant’s owner, Aman Chourasia.

The entrepreneur’s name has emerged in an alleged half-billion-dollar international fraud at commodities group Trafigura, the FT’s Cynthia O’Murchu in London and DD’s Kaye Wiggins report.

Spring Metal — which Chourasia incorporated in the low-tax, high-secrecy Malaysian offshore centre of Labuan in January 2015, according to corporate records — is one of seven companies accused by Trafigura in London’s High Court of duping it into buying more than a thousand shipping containers of non-existent nickel.

DD readers may remember Prateek Gupta, the Dubai-based businessman at the centre of the scandal.

Trafigura alleges Gupta, who denies wrongdoing, has “de facto” control over a handful of the companies involved in the scandal including Spring Metal, and even had access to the company’s email account.

When the FT paid a visit to Sandwich Hub, Chourasia joked about the shop’s branding, but wouldn’t immediately comment on the Trafigura case.

“We dispute the allegations that have been made by Trafigura and will defend the claim in full,” he said later by email, but declined to address individual allegations in detail in light of the court proceedings.

The big question is what due diligence Trafigura conducted related to its counterparties, and how it missed more than one red flag.

It’ll all come out in court, but in the meantime the Facebook reviews for Sandwich Hub are five-star.

Job moves

• JPMorgan Chase has hired John China — the president of Silicon Valley Bank’s venture capital arm SVB Capital — as co-head of innovation economy based in San Francisco.

• Carlyle has named Shane Clifford as head of private wealth strategy, based in New York. He was previously a senior managing director of alternative strategies at Franklin Templeton.

• Citigroup has promoted Flavio Figueiredo to global head of foreign exchange, based in New York.

• Houlihan Lokey has agreed to acquire 7 Mile Advisors. The deal will add 7MA’s approximately 30 financial professionals to Houlihan Lokey’s IT investment banking team as well as a new office in Charlotte, North Carolina.

Smart reads

Private equity plays hardball A fierce private buyout battle over US industrials group Circor illustrates the modern dilemmas boards face while seeking out the best price for their shareholders, writes DD’s Sujeet Indap.

Regulatory fail Bonds linked to Saudi Aramco have ended up in funds reserved for sustainable investments as a result of the convoluted financial structures it uses to raise money from its gas pipelines, Bloomberg reports.

The Wall Street doctor is in Psychiatrist Sam Glazer has become popular among dealmakers as substance abuse and other mental illnesses become increasingly pervasive issues in the industry, The Wall Street Journal reports.

News round-up

Saudi Arabia sought central role in professional golf (FT)

A glass house for Elon Musk sparks internal Tesla probe (WSJ)

Bank of America to pay $250mn for overdraft and credit card abuse (FT)

Disney explores strategic options for India business (WSJ)

Kim Kardashian in talks to buy back stake in beauty business from Coty (WSJ)

Alleged Odey victims seek safeguarding of firm’s assets ahead of litigation (FT)

UK ministers intervene in 8 deals involving China-linked investment (FT)

There’s a hot new hedge fund hotel (Alphaville)