Activision Blizzard is purchasing King Digital, the makers of popular game Candy Crush, for a total equity value of $5.9 billion.
The deal is all cash.
Activision Blizzard will $18 per share, which is nearly a $20% premium over King's recent price.
While the acquisition still has to be approved by King's shareholders and cleared by relevant antitrust authorities, the sale was unanimously approved by the boards of both Activision and King. It is expected that the sale will completed by Spring 2016.
With the acquisition, Activision Blizzard will have added two of the top five highest grossing US mobile games to its already formidable war chest of intellectual properties, including Call of Duty, World of WarCraft, StarCraft, Hearthstone, Guitar Hero, Destiny and others.
Here's the statement from Bobby Kotick, CEO of Activision Blizzard:
“The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment. With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before.”
The purchase is a major signal by Activision that it plans to move more aggressively into mobile gaming. As of its 2nd quarter earnings, just 5 percent of its net revenue came from mobile and other sources. 54 percent came from console games, 21 percent from online and 14 percent from PC gaming.
That should change. King Digital reported $490 million in second quarter revenue in August, according to the Wall Street Journal. All of that is from web and mobile games.
Though Candy Crush has been a rousing commercial and popular success since it was first launched in 2012, King has struggled to release another title even coming close to the puzzle game's popularity.
The app accounts for a third of King's revenues currently. Revenue from Candy Crush is declining however, reflecting the game's waning popularity. King posted a 28% drop in net profit in the second quarter, owing to an 18% fall in revenue.
(Business Insider)
