Activision buying Candy Crush maker King Games for $5.9 billion

In short, Activision, with its hands on Candy Crush, Call of Duty, Destiny, Guitar Hero, Skylanders, World of Warcraft, etc., stands to become a “global leader” across the spectrum of interactive entertainment. It operates in three segments: Activision Publishing, Inc. and its subsidiaries engaged in publishing interactive entertainment software products and downloadable content; Blizzard Entertainment, Inc. and its subsidiaries engaged in publishing real-time strategy, role-playing PC games and online subscription-based games, and Activision Blizzard Distribution, which is engaged in distributing interactive entertainment software and hardware products. Activision expects to close the deal in spring 2016.

SYDELL: But CEO Kotick thinks the audience for games like “Candy Crush” is one Activision needs to tap. Most of us must have noticed those (not so) young women playing the game on their phone in the subway their entire ride. King’s shares are trading just under $18 per share, about 20 percent below its IPO price.

King had adjusted revenues of $2.1 billion over the past 12 months, the company said.

“Having King’s experience in running and monetizing mobile games as a service will be a priceless asset to a company that is still on the learning curve when it comes to mobile”.

With the purchase, Activision wants to capitalize on the growing mobile gaming industry, which is the top revenue generating category in the gaming industry, with forecasted revenues of about $36 billion. Thanks to the increasing popularity of mobile devices, the mobile games market is expected to balloon in 2019, reaching $55 billion, while the traditional games market is set to peak at $57 billion during the same year, according to Activision Blizzard.

“We have long-admired King for consistently creating incredibly fun, deeply engaging free-to-play games that capture the imaginations of players across ages and demographics”, Bobby Kotick, CEO of Activision Blizzard, said in a statement.

King, however, had to face questions regarding its ability to duplicate the massive success of its Candy Crush title, which resulted in a 7,000 percent jump in the game maker’s annual profit.

Shares of King Digital Entertainment Plc., which went public in March 2014, jumped almost 15 percent, or $2.31, to $17.85 a couple hours before markets opened Tuesday and after the deal was announced.

King’s net revenue – still heavily reliant on Candy Crush – fell 16 per cent in the second quarter.

Activision said it will use $3.6bn of cash stored outside the USA, and borrow the rest.