Activision Blizzard acquiring King Digital for $5.9 billion

Now, $5.9 billion later, it’s a major player in the market, which CEO Bobby Kotick describes as “the fastest-growing segment in gaming”, “still very fragmented, and we believe it has great promise for the future”.

Activision pay more for King than Disney paid for Marvel, Lucasfilm.

By acquiring King, Activision will be an ever larger juggernaut in the wider world of gaming.

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. The company generated almost $2.3 billion in 2014 sales, but Wedbush Securities expected the figure to drop to just under $2 billion this year and to less than $1.9 billion in 2016. You can read the press release from Activision Blizzard here.

Activision Blizzard will be paying King Digital Entertainment $18 in cash for each share- 16 percent higher than $17.73 to which it was trading on Tuesday.

King Digital’s management including its CEO will be retained and the Dublin-based company will continue to function as an independent unit. As per Activision, the deal would make it the one of the biggest global leader in interactive entertainment industry.

This is helped by the fact that no technology other than a basic smartphone is required to play it, and the simple, yet addictive game play keeps people re-opening the multi-billion pound app to carry on from where they left off. Wedbush reissued an “outperform” rating and issued a $31.00 target price on shares of Activision Blizzard in a report on Wednesday, July 29th.

“Candy Crush” is a game so engrossing that it allegedly led a San Diego man to rupture a tendon in his thumb.

While Activision stock has tripled over the past three years, its revenue has fallen from $3.6 billion in fiscal 2012 to $2.8 billion in 2014.

Candy Crush is the crown jewel of King, accounting for approximately a third of revenue.

King and Rovio, the developer behind the “Angry Bird” games, seem to be the only studios to have found a stable foothold in the mobile game market. It will have a few 500 million active monthly users around the world.

Riccardo Zacconi, Chief Executive Officer of King, said, “We will combine our expertise in mobile and free-to-play with Activision Blizzard’s world-class brands and proven track record of building and sustaining the most successful franchises, to bring the best games in the world to millions of players worldwide”.