Activision buying Candy Crush creator
LOS ANGELES — Video game giant Activision Blizzard Inc. announced Monday night an agreement to buy mobilegaming company King Digital Entertainment for $ 5.9 billion.
The acquisition raises Activision Blizzard’s stature in the fast- growing mobile- gaming industry, which is expected to reach worldwide revenue of $ 45 billion in 2018 at 15 percent annual growth, according to investment bank Digi- Capital.
The maker of Call of Duty and World of Warcraft, based outside Los Angeles, is getting the No. 4 mobile- gaming company by app revenue, as of September data from tracking firm AppAnnie. King’s two hits, Candy Crush Saga and Candy Crush Soda Saga, were among the six most downloaded game apps across the world in September, the firm said. The puzzle games involve matching virtual candies on a jumbled grid to score points. The games are free, but players may purchase special features to help them along.
The chief rivals of King, founded in 2003 as a gaming website, include Asian technology companies Tencent and Mixi, as well as Finland- based Clash of Clans developer Supercell.
Acquiring King’s more than 474 million players pushes Activision past 500 million players who turn on a game at least once a month, a “bigger [ user base] than anything beside YouTube and Facebook and one of the very few entertainment networks of that scale,” Activision Blizzard Chief Executive Officer Bobby Kotick said in an interview.
King, whose games are popular mostly with women, also brings a new audience to a company whose fan base is dominated by men and hardcore gamers.
“We now have male and female gamers, spanning 196 countries, casual and hardcore,” Kotick said. “We love the idea of adding millions of females to our audience.”
Activision Blizzard has been a force in console and computer games but hadn’t moved as aggressively into smartphone and tablet games as some rivals and upstarts. Still, it’s found a hit in mobile card game Hearthstone and generated strong digital revenue elsewhere. Shares of Activision are up more than 70 percent this year, a top performer on Wall Street.
Discussions about a possible deal began in April, though Kotick said King executives were reluctant to lose independence and had no reason to sell.
“But when they saw what the combined network would do, to be able to reach audiences around the world, I think they found there would be more opportunity to express themselves creatively and commercially,” Kotick said.
But analysts have wondered whether King can generate sales off new games fast enough to make up falling revenue from existing titles, and large shareholders could have been antsy to pocket gains while they could.
“King was unlikely to replicate the massive success of Candy Crush Saga at its peak, so the merger provides the best case scenario for investors,” Patrick Walker, vice president of insights at video game industry consultancy EEDAR, said in an email.
Activision Blizzard plans to use $ 3.6 billion in cash stored offshore and a $ 2.3 billion bank loan to pay $ 18 per share for King. That’s a discount in relation to the $ 22.50 share price that the Dublin, Ireland, company offered when it went public in March 2014.
The deal, which is subject to approval by King’s shareholders and regulators, is expected to close by spring.