Activision Blizzard to buy 'Candy Crush' maker King for $5.9B
DUBLIN (Reuters) -- Video game maker Activision Blizzard it to buy "Candy Crush Saga" creator King Digital Entertainment for $5.9 billion, as the heavyweight of console and PC gaming makes a major push into the faster-growing mobile market.
The deal would be one of the biggest in the industry in recent years, more than twice the size of Microsoft's $2.5 billion purchase of "Minecraft" maker Mojang last year, and the biggest-ever acquisition of a mobile gaming company.
Activision is paying $18 per share in cash, a takeover premium of 16 percent over King's current market value, showing how the company's fortunes have flagged since its 2012 initial public offering at $22.50 per share.
The company's net revenue -- still heavily reliant on Candy Crush -- fell 16 percent in the second quarter.
500 MILLION USERS
With the gaming business driven as much by hits as the movie business, some young companies like Finland's Rovio, the maker of Angry Birds, and online games company Zygna have faded from prominence.
Analysts from Jefferies said the task facing King of replicating the success of Candy Crush was a "daunting task".
"We expect a heavy dose of skepticism from investors especially given the large deal size," said the brokerage, which nonetheless recommends investors continue buying Activision shares.
Activision said buying King would help broaden the reach of its games, adding that 60 percent of King's players were female, and that the combined company would have more than 500 million monthly active users across the world.
It said the deal would add to its estimated 2016 adjusted revenue and earnings by about 30 percent. It added it would use $3.6 billion of cash held offshore to fund the acquisition, and borrow the rest.
King will continue to operate as an independent unit led by Chief Executive Riccardo Zacconi, who told Reuters that Activision appealed to him because of the company's expertise in building long-lasting franchises.
European private equity fund Apax listed King in 2014 and holds a 44.68 percent stake in the company, according to Thomson Reuters data.
The deal, expected to be completed by spring 2016, is subject to approval by King's shareholders and the Irish High Court, and clearances by antitrust authorities.