Activision Blizzard has acquired King Digital and its portfolio of social games for $5.9 billion.
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Activision, whose games include the “Call of Duty” series, said in a statement the purchase “will create one of the largest global entertainment networks with over half a billion combined monthly active users in 196 countries”.
But why did Activision Blizzard acquire a “one-hit wonder” company?
“Activision Blizzard will provide King with experience, support and investment to continue to build on their tremendous legacy and reach new potential”, says Bobby Kotick, Chief Executive Officer of Activision Blizzard.
The Acquisition is subject to approval by King’s shareholders and the Irish High Court, clearances by the relevant antitrust authorities and other customary closing conditions, and it is now expected that the acquisition will be completed by spring 2016. The deal also gives the U.S. company a major presence in the mobile market, where games sales are expected to grow 21 per cent this year, according to research firm Newzoo. “King has a truly fantastic management team and over 1,600 incredibly talented employees and we are excited to welcome them into the Activision Blizzard family”.
In the App Store, Candy Crush Saga is still in top five of the most downloaded mobile video games, while its less-successful sequel Candy Crush Soda is listed on the sixth place.
Activision will pay $18 a share in cash, a premium of the takeover of 16% over the current King market value, showing how the fortunes of the company have flagged since its IPO in 2012 with a per share price of $22.50.
“[Activision Blizzard] buying King is not something that we considered possible given [Activision Blizzard’s] historical view of mobile and the types of deals that have been done in the space, as well as King’s declining growth profile”, analyst David Cole of DFC Intelligence said according to Gamasutra. However, the company was slow to market with mobile games for smartphones and tablets.
The game is already plagued with bugs and complaints, where accidental purchases are made with the unconfirmed click of a button and draining user’s wallets, and this new development could cause many more bugs.
Rovio gained a lot after the “Angry Birds” release in 2009, but similar to King, it failed to produce similar successful games causing profits to drop and staff to get laid off.
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Combined, the two companies have generated $6.8 billion in non-GAAP revenues over the trailing 12 months.
