Activision buys Candy Crush studio King in $5.9B megadeal

The two companies will combine to have over half a billion monthly active users in 196 countries

Big news in the gaming world tonight, as one of the biggest companies in the space has just bought another of the biggest companies in a deal worth multiple billions of dollars.

Game publisher Activision Blizzard, the company behind such behemoths as all Call of Duty and Guitar Hero, announced on Monday that it has acquired King Digital Entertainment, the company behind Candy Crush Saga.

As per the deal, ABS Partners, a wholly owned subsidiary of Activision Blizzard, will acquire all of the outstanding shares of King for $18.00 in cash per share, for a total equity value of $5.9 billion. Activision is paying a 26 percent premium over King's stock price on October 30, which was $14.96 a share.

The boards of directors of both companies have already unanimously approved the deal, though it is subject to approval by King’s shareholders and the Irish High Court, clearances by the relevant antitrust authorities and other customary closing conditions. It is currently expected to be completed by Spring of 2016.

From's Activision's point of view, gaining access to King's library of games gives it a big leg up in the mobile space. The company's Candy Crush Saga has been a phenomenon; released on mobile in November of 2012, by November of 2013 it has been downloaded an astounding 500 million times. That is half a billion people in one year, the most for any game ever. Candy Crush Saga and Candy Crush Soda Saga are two of the top five highest-grossing mobile games in the United States.

By buying King, Activision says that it will create one of the largest global entertainment networks with over half a billion combined monthly active users in 196 countries.

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

In addtion, the two companies have "highly-complementary cultures," it said in the release "with aligned commitment to innovation, deep respect for the creative process, franchise focus, and emphasis on talent development."

Despite King's overwhelming success with Candy Crush, it has never been able to replicate that same success with any of its subsequent releases, such as its Bubble Witch and Farm Heroes franchises. As of the second quarter of 2015, King's gross bookings from Candy Crush Saga titles were still 39 percent of all revenue.

Profit for the company was $119 million for second quarter 2015, decreasing by $45 million, or 27%, compared to first quarter 2015.

Due to its reliance on one title for such a high portion of revenue, King's stock struggled right out of the gate. When it went public in March of 2014, the company closed its first day of trading at $19, down 15.56% from its original price of $22.50.

The stock hit a high point in July of last year, barely squeaking above is IPO price at $22.53 a share, but fell below $20 again later that month and never recovered. Frankly, an IPO built around one hit game, no matter how big of a hit it was, always seemed like maybe not the best idea.

Now that it is part of Activision, King will continue to be an independent operating unit, and it will be led by Chief Executive Officer Riccardo Zacconi, Chief Creative Officer Sebastian Knutsson, and Chief Operating Officer Stephane Kurgan.

"We believe that the Acquisition will position us very well for the next phase of our company’s evolution and will bring clear benefits to our players and employees," Zacconi said in a statement.

"We are very much looking forward to working with Activision Blizzard. We have two teams that, together, will have an amazing footprint, innovative technology, and leadership across platforms, and unique, established IPs to delight one of the largest networks of players in the world.”

(Image source: media.gamerevolution.com)