Activision acquires King, makers of Candy Crush, for $5.9b

Gaming company Activision Blizzard has agreed to acquire King Digital Entertainment, the makers of popular games like Candy Crush Saga, for $5.9 billion in cash.

King went public last March and raised a little under $500 million in its IPO when it offered shares at $24 each — bringing its initial valuation to just over $7 billion. For this transaction, shares went at $18 each.

The purchase will give Activision Blizzard a chance to delve deep into mobile and social games like never before. It already dominates the PC gaming space with major franchises like Call of Duty and World of Warcraft, and it now has 200 more casual titles, including two of the top five highest-grossing mobile games in the US from King.

The combined company has over 1,000 titles in its library, including heavy hitters like Diablo, Destiny and Guitar Hero for consoles.

Until now, Activision hasn’t focused on mobile gaming much — in its second quarter, only $54 million, or 5 percent of its net revenues came from mobile, while consoles games brought in 54 percent and the rest was split between PC and online titles, totalling just over $1 billion.

With its new acquisition, the company will be in a better position to take on its arch rival Electronic Arts in the mobile space. EA claims it already has over 150 million monthly active users on mobile and earned $142 million from its sales last quarter.

Is it the best buy Activision could make? There are a couple of issues to take into consideration:

• While King had made a ton of money — $530 million, to be precise — in its last quarter, of which $119 million came from Candy Crush, Recode notes that those numbers are lower than the previous quarter, down from gross bookings of $648 million.
• The company has also failed to recreate its Candy Crush success with other titles — even though it’s a trusted brand in the mobile gaming space.
• King no longer has its crown prince on board. Tommy Palm, the mastermind behind Candy Crush Saga, left the company in January to start Resolution Games, a VR-focused entertainment firm.

It’ll be interesting to see if the combined company can indeed rule mobile gaming as King once did.

➤ Activision to Acquire King Digital Entertainment for $5.9 Billion [King Press Releases]