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Microsoft and Activision Blizzard on Wednesday agreed to extend the deadline for their merger agreement until Oct. 18, Activision said in a statement on Wednesday.

The two companies had originally agreed to complete the transaction by July 18, but regulatory pushback from the U.S. and the U.K. delayed the takeover.

If Microsoft had not extended the deal deadline, the company could have been on the hook for a $3 billion breakup fee to Activision Blizzard. By extending the period for the companies to close on their transaction, Microsoft and Activision are giving themselves more time to satisfy regulators’ concerns and to get it over the line.

A new agreement between Microsoft and Activision, struck on July 18, included a provision to bump up the termination fee by increments at certain periods, if the merger is not agreed by the new deadline.

By Aug. 29, the breakup fee will be increased to $3.5 billion if the transaction is terminated by the parties, while by Sept. 15, the potential breakup fee will rise to $4.5 billion.

UK regulator ready to negotiate

The extension was made as the U.K. Competition and Markets Authority moved to delay its review of the deal until Aug. 29. Microsoft and Activision are now giving themselves enough time for the CMA appraisal to finalize.

The CMA had initially blocked the transaction in May, citing concerns over the threat to competition in the nascent cloud gaming market. The U.K. regulator changed tack and paused all litigation after the Federal Trade Commission’s attempt to block the deal failed in court.

The CMA said it was “ready to consider any proposals from Microsoft to restructure the transaction” in a way to satisfy the regulator’s concerns.

The regulator will now need to open a fresh review into the deal based on its past work. While this could ordinarily take several months, the watchdog is looking to expedite the process to meet its own Aug. 29 deadline.

The CMA will allow Microsoft to submit a restructured deal. When the EU gave the greenlight for the takeover, it was predicated on some concessions from Microsoft, which included royalty-free licenses to cloud gaming platforms to stream Activision games.

Microsoft offered similar concessions to the CMA, but the remedies were rejected, as the regulator argued they were hard to enforce and wouldn’t address concerns over a concentration of power in the cloud gaming space. Microsoft will have to come up with a new package of measures beyond its previous offer to allay the CMA’s concerns.

Regulators around the world had questioned that the deal could limit the distribution of Activision’s hit Call of Duty game franchise.

Sony and other industry players had expressed concern that Microsoft could make Call of Duty exclusive to its outlet, or reduce the quality of the game on competing platforms.

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