Activision Blizzard buys Candy Crush maker King for $5.9 billion

Combined Company to be Crowned a Leader in Interactive Entertainment

world-of-warcraft Activision Blizzard Robert Kotick

 

Activision Blizzard led by its Chief Executive Officer Robert Kotick has bought the mobile hit Candy Crush publisher, King Digital Entertainment, for $5.9 billion. The biggest takeover of a UK-based tech company since HP acquired Autonomy for $11 billion four years ago.

The deal creates one of the largest entertainment networks with over half a billion monthly active users in 196 Countries combined portfolio to encompass 10 of the world’s most Iconic Interactive entertainment franchises.

Back in 2008 Activision already owns one of the biggest gaming franchises in Call of Duty, in addition to Destiny, World of WarCraft and StarCraft, as a result of its merger with Blizzard.

King was founded in Sweden in 2003 and has created more than 200 games, including Supercell’s Clash of Clans, Machine Zone’s Game of War and Microsoft’s Minecraft account for a disproportionately large amount of consumer spending on smartphone games.

Candy Crush, which was first launched on Facebook and smartphones in 2012, still accounts for more than a third of King’s revenues. Overall consumer spending on King’s titles fell by 13 per cent year-on-year in the second quarter, suggesting that King may follow other social game companies in becoming one-hit wonders.

King CEO Riccardo Zacconi said that his company had built one of the largest networks of players on Facebook and on mobile devices, noting that King’s games had 474 million monthly active users in the third quarter of 2015.

The perches gives Activision Blizzard instant access to a huge mobile market. The company has traditionally focused on console and PC games, with just five percent of its net revenue coming from the mobile sector in its latest earnings report.

This move may generate $36 billion in revenue by the end of this year. But while the acquisition of King will add a lot to Activision Blizzard’s bottom line, it likely won’t be as atractive to gamers at large.

The $5.9 billion all-cash transaction represents a 26 per cent premium to King’s $4.7 billion market capitalisation, but the $18-per-share price is below the $22.50 level at which King went public on the New York Stock Exchange last year, Ft says.

“The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment, ” said Bobby Kotick, chief executive of Activision Blizzard, in a statement.

Riccardo Zacconi, King’s chief executive, said the deal would “position us very well for the next phase of our company’s evolution”.

Mr Zacconi, along with King’s chief creative officer Sebastian Knutsson and chief operating officer Stephane Kurgan, will stay on with the new group after signing “long-term” employment contracts.

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