MSFT - Wall Street Breakfast Podcast: FTC Hearing To Block Microsoft Activision Deal Concludes

2023-06-30 06:36:28 ET

Summary

• A judge is set to decide whether the Federal Trade Commission (FTC) can block Microsoft's $69 billion acquisition of Activision.
• Monster Beverage Corporation is reportedly close to acquiring energy drink maker Bang Energy for $362 million.
• The Biden administration is developing a "safety net period" for Americans resuming student loan payments this fall, with a proposed three-month grace period for missed payments and the possibility of further 90-day extensions. The Supreme Court is also set to issue its opinion on whether President Biden has the authority to cancel billions of dollars of student debt.

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify FTC hearing to block Microsoft ( MSFT ) $69B acquisition of Activision ( ATVI ) concludes (00:33). Energy drinks M&A : Monster Beverage ( MNST ) closes in on deal for rival Bang (01:45). Biden administration develops 'safety net' for student loan payments restart (02:39).

This is an abridged transcript of the podcast.

A judge will now decide if the Federal Trade Commission can block Microsoft's (NASDAQ: MSFT ) $69 billion acquisition of Activision (NASDAQ: ATVI ) after a five-day trial concluded.

Final arguments have been presented and now we wait for the ruling.

The trial included testimony from the CEO’s of Microsoft ( MSFT ) and Activision's ( ATVI ) as they faced off against lawyers from the Federal Trade Commission.

The suit was made because the FTC feels that the $69B tie-up between Microsoft and one of the best known game developers could harm competition .

Activision's Call of Duty and World of Warcraft are some of the most popular gaming franchises, and it is believed that this union could limit rivals' access to titles or raise prices for other gaming platforms.

The FTC also said it would give the Xbox maker an unfair advantage in the new market for game subscriptions, as well as the emerging market for cloud gaming.

The trial and its timing are crucial as the transaction has a July 18 termination date, after which billions in breakup fees would need to be paid by Microsoft or terms would have to be renegotiated.

According to a court filing in the U.S. District Bankruptcy Court in Florida, Monster Beverage Corporation (NASDAQ: MNST ) is close to acquiring energy drink maker Bang Energy out of bankruptcy for $362M. The bid is inclusive of a $25M deposit and the assumption of liabilities.

Bang Energy maker Vital Pharmaceuticals said a proposed sale to Monster Beverage ( MNST ) is supported by major lenders and represents a viable path to repaying its creditors.

However, there is a regulatory hurdle to clear, with the Federal Trade Commission indicating it will require more information as part of the deal review process.

Bloomberg reported Bang could be forced to liquidate unless the FTC grants early termination of the review because Monster requires a closing date by August 3, and financing for the bankruptcy case matures in just days.

The Supreme Court is poised to issue its opinion on whether President Biden has the authority to cancel billions of dollars of student debt. That decision is due to come out this morning.

Meanwhile, the Biden administration is crafting a "safety net period" for tens of millions of Americans who are set to resume making student loan payments this fall, after a more than three-year pause.

According to media reports, the Education Department recently finalized a plan for a three-month grace period for missed payments once the student loans come due in October.

Politico reported, citing two people familiar with the talks that the department instructed loan services to prepare to extend the flexibility for further 90-day periods.

With the expiration of pandemic-era relief measures, interest will resume accruing on Sept. 1, and will continue even if borrowers miss payments, the article said.

Under the so-called "safety net period," borrowers who miss payments would not see their credit ratings hurt until well into 2024. And severely delinquent borrowers wouldn't see their loans enter default until 2025 at the earliest.

Other headlines to look out for on Seeking Alpha:

Foxconn to invest $246M in Vietnam to set up 2 factories - report

Apple continues march towards $3T, Citi praises gross margins

FedNow to launch late July with early adopters JPMorgan, Wells Fargo, others

Root Inc. tumbles after saying it hasn't received actionable offer

Nike records margin beat, strong sales tally in China for FQ4

On our catalyst watch for the day, It is the last trading day of the quarter and first half of the year, which means some window dressing with fund managers could take place in terms of adding on popular names such as Amazon ( AMZN ), Alphabet ( GOOG ), Apple ( AAPL ), Tesla ( TSLA ), Microsoft ( MSFT ), Meta Platforms ( META ), and Nvidia ( NVDA ) to replace stocks on a losing streak that would show up on quarter-end holding reports.

There has been a slight historical correlation with the highest market cap stocks gaining in the last week of a quarter relative to the broad market and the biggest decliners of the quarter seeing additional selling pressure.

Wall Street's major averages on Thursday ended largely higher.

The Nasdaq ( COMP.IND ) ended flat. The S&P 500 ( SP500 ) and the Dow ( DJI ) posted gains, with the former rising 0.45% and the latter adding 0.80%.

The 10-year yield ( US10Y ) was up 13 basis points to 3.84% while the 2-year yield ( US2Y ) was up 14 basis points to 4.86%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are pointing higher. The Dow is up 0.1%, the S&P 500 is up 0.3% and the Nasdaq is up 0.5%. Crude oil is up 0.5% at more than $70 a barrel. Bitcoin is up 0.3% and is still above 30,000.

In the world markets, the FTSE 100 is up 0.7% and the DAX is up 1%.

On today’s economic calendar, at 830 am the core PCE price index and at 10am consumer sentiment.

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