Activision Blizzard is buying “Candy Crush” developer King Digital for $5.9 billion, the companies announced this week. The Activision King Digital acquisition includes King’s hugely popular “Candy Crush” mobile games. Activision already owns many of the top console and PC games like “Call of Duty” and “World of Warcraft”.
If that sounds like a lot to spend on a game developer, consider that King’s “Candy Crush” and “Candy Crush Soda Saga” are still in the top five highest-grossing mobile games in the US. Candy Crush” raked in $1.4 billion in revenue for King in 2014, and $529 million in the first half of 2015. King recently reported having around 474 million monthly active users.
During the last twelve months through September 2015, King reported total adjusted revenues of $2.1 billion, and a net profit of $0.6 billion. It helps King that mobile gaming is the largest and fastest-growing area of interactive entertainment — mobile games are expected to generate over $36 billion of revenue by the end of 2015 and grow cumulatively by over 50% from 2015 to 2019.
Besides Activision’s hugely popular console game “Call of Duty” and the wildly successful personal computing franchise “World of Warcraft”, the Santa Monica, Calif. based company also holds rights to 1,000 game titles, including Activision Publishing’s “Guitar Hero”, “Skylanders” and “Destiny”, plus Blizzard Entertainment’s popular “StarCraft”, “Diablo”, and “Hearthstone: Heroes of Warcraft”.
During the last twelve months through September 2015, Activision Blizzard posted GAAP revenues of $4.9 billion, non-GAAP revenues of $4.7 billion, and GAAP net income of $1.1 billion.
Activision King Digital acquisition details
Under the terms of the Activision King Digital deal, ABS Partners C.V. (“ABS Partners”), a wholly owned subsidiary of Activision Blizzard, Inc. (“Activision Blizzard”) (Nasdaq:ATVI) will acquire King Digital Entertainment plc (NYSE: KING) — including all of the outstanding shares of King for $18.00 in cash per share — for a total equity value of $5.9 billion.
The $18.00 per share purchase price implies a 20% premium over King’s 30 October 2015 closing price, a 26% premium over King’s 30 October 2015 enterprise value (which excludes net cash), a 23% premium over King’s one month volume weighted average price per share and a 27% premium over King’s three month volume weighted average price per share.
King will continue to be led by Chief Executive Officer Riccardo Zacconi, Chief Creative Officer Sebastian Knutsson, and Chief Operating Officer Stephane Kurgan. Activision plans for King to function as an independent operating unit, with the added benefit of being part of Activision.
Although the boards of both companies unanimously approved the Activision King Digital acquisition, it will have to be approved in Ireland — where King is based — with a final agreement expected by spring of 2016.
