Activision buys ‘Candy Crush’ maker for $5.9 billion

The company reported $0.21 earnings per share for the quarter, beating the Thomson Reuters’ consensus estimate of $0.15 by $0.06, MarketBeat.Com reports. In the year prior to that, the firm paid out $0.19 per share in distributions, or a difference of 5.2632%. Zynga Inc. (ZNGA) stated on Tuesday that its third quarter net income of $3.1M, following reporting a loss in the same period a year earlier. 62% of Candy Crush players are female, many of whom are willing to pay for in-app purchases which is where the money is made in mobile games. Adjusted EBITDA was $180 million compared with $216 million in the prior-year quarter.

The company behind the hugely successful “Call of Duty” has struck a $5.9 billion deal to buy the makers of the highly addictive “Candy Crush” and take advantage of the way video games are moving out of living rooms and onto smartphones and tablets. Several reports praise the company for using its overseas cash in a more tax-efficient manner than repatriating it. However, this analysis assumes a binary decision: buy King or repatriate. Year-to-Date the stock performance stands at 79.59%.”The company shares have rallied 73.28% from its 1 Year high price”.

King will continue to be run by CEO Riccardo Zacconi as an independent unit of Activision with the deal expected to be completed by spring 2016.

The acquisition is a positive for King Digital. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 13 cents per share.

On the other consideration, Activision Blizzard, Inc. (Blizzard) and its subsidiaries engaged in publishing real-time strategy, role-playing PC games and online subscription-based games in the multiplayer online role-playing game (MMORPG) category, and Activision Blizzard Distribution engaged in distributing interactive entertainment software and hardware products (Distribution).

The company derives the major portion of its revenues from mobile platforms. The 12-month consensus target price for the stock is $36.29, which reflects an downside potential of 2.05% over the current price. “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”.

“This gives them access to the mobile market at a time when the console market has had a tremendous year”, Lord said, “but we’re not sure where it’s going to go”. The integration is likely to result in the formation of one of the biggest global players in the interactive entertainment industry.

The boards of both companies have approved the deal, but King shareholders must still vote on it and regulators in Ireland, where King is based, must also sign off.

In an interesting turn of events, Activision now own King Digital.