Video game maker Activision Blizzard to buy ‘Candy Crush’ creator King Digital for $5.9b

Mascots dressed as characters from the mobile video game "Candy Crush Saga" pose during the IPO of Mobile game maker King Digital Entertainment Plc on the floor of the New York Stock Exchange March 26, 2014. REUTERS/Brendan McDermid

Video game maker Activision Blizzard Inc said it will buy “Candy Crush Saga” creator King Digital Entertainment for $5.9 billion to strengthen its mobile games portfolio.

ABS Partners CV, a unit of Activision Blizzard, will acquire King shares for $18 each in cash, representing a premium of 16 percent to King’s closing price on Monday.

The addition of King’s mobile games will position Activision as a global leader in interactive entertainment across mobile, console and PC platforms, Activision said in a statement.

Video game publishers are shifting to the lucrative digital business from physical sales of games as consumers shift from consoles to playing on smartphones and tablets.

The fast-growing mobile gaming segment is expected to generate more than $36 billion in revenue by the end of 2015, according to Activision.

Activision Blizzard Chief Executive Bobby Kotick told Reuters that buying King will help broaden the reach of its games and expand into new demographics, adding that 60 percent of King’s players are female and that no gaming consoles or hardware, besides a phone, is needed to play King’s games.

“You have such broad reach. This is a fantastic opportunity for us to create compelling content for new demographics,” Kotick said.

Activision, which owns popular game franchises such as “World of Warcraft,” “Call of Duty,” and “Diablo,” said the deal gives the combined company more than 500 million monthly active users across the world and would add to Activision’s estimated 2016 adjusted revenue and earnings by about 30 percent.

Dublin, Ireland-based King will continue to operate as an independent operating unit led by Chief Executive Riccardo Zacconi. Zacconi told Reuters that Activision appealed to him because of the company’s expertise in building long-lasting franchises.

King, which went public last March, has been struggling to boost bookings – an indicator of future revenue.

The deal, expected to be completed by spring 2016, is subject to approval by King’s shareholders and the Irish High Court, and clearances by antitrust authorities.

Activision said it will use $3.6 billion of offshore cash and borrow the rest from Bank of America Merrill Lynch and Goldman Sachs Bank as incremental lenders.

Activision also reported third-quarter earnings of 17 cents per share, compared with a loss of 3 cents a year earlier. Excluding items, it earned 21 cents per share. Revenue rose 31 percent to $990 million. Analysts had expected earnings of 15 cents a share, on revenue of $950.4 million.

(Editing by Gopakumar Warrier)

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.