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“We are confident about our prospects for getting this deal across the finish line,” Smith said.

The extension comes with a bigger termination fee, should the deal be called off, and a number of other new agreements.

Tuesday marked an important deadline for the deal announced 18 months earlier. Both Microsoft and Activision had agreed that either party could walk away from the planned merger if it hadn’t closed by then, triggering Microsoft to potentially have to pay a $3 billion breakup fee unless both sides decided to renegotiate.

That termination fee has been increased to $3.5 billion with the extension. If the deal does not close by Sept. 15, it will increase to $4.5 billion.

“I am happy to share that based on our continued confidence in closing our deal, the Activision Blizzard and Microsoft boards have mutually agreed not to terminate the deal until after October 18,” Activision Blizzard CEO Bobby Kotick said in a note to employees.

He emphasized that it's already been granted approval in 40 countries, which , and he was confident the U.K. concerns would be resolved.

Microsoft spent this month working to resolve longstanding legal challenges from antitrust enforcers in the U.S. and U.K. who argued the merger would harm competition.

The deal was effectively clear to go in the U.S. this week, especially after the Supreme Court decided against hearing a last-ditch effort to block the takeover described themselves as fans of popular Activision titles Call of Duty, World of Warcraft, Overwatch and Diablo.

Justice Elena Kagan rejected the emergency appeal without comment on Tuesday. Kagan handles emergency matters from California and other western states.

But the U.K. remained an obstacle, though one that's likely to be surmounted.

The Competition and Markets Authority initially , but later pushed back its final decision so it can consider Microsoft’s argument that new developments mean its acquisition can go through.

A judge on Monday conditionally approved a joint request from Microsoft and the British regulator to delay upcoming proceedings, enabling both sides to further negotiate.

Daniel Beard, an attorney representing Microsoft in the U.K. case, told the judge Monday he was grateful the process is moving quickly because “the U.K. is the only impediment to closing and speed is of the essence.”

Among the additional information sought by the judge was Microsoft's Sunday announcement of a deal addressing concerns from top rival Sony, maker of the PlayStation console that’s a competitor to Microsoft’s Xbox. Microsoft said it signed a deal with Sony to keep Call of Duty on PlayStation for at least 10 years.

Such a deal would also appear to address at least one of the concerns about loss of competition brought by the U.S. Federal Trade Commission, which sued in December to stop the deal.

The FTC hasn’t said if it will continue to fight the takeover and a its attempt to stop the deal from closing. The FTC could still continue a case set for the agency’s in-house judge in August, but that wouldn’t preclude the two companies from completing the merger beforehand.

Phil Spencer, head of Microsoft’s Xbox division, said in an email to employees: “While we can technically close in the United States due to recent legal developments, this extension gives us additional time to resolve the remaining regulatory concerns in the UK.”