Irish-based ‘Candy Crush’ game firm sold for €5.35bn

Activision Blizzard has agreed to buy Irish-based King Digital Entertainment for $5.9bn (€5.35bn), unifying console and PC games ‘Call of Duty’ and ‘World of Warcraft’ with the leading mobile game ‘Candy Crush Saga’.

Activision will pay $18 a share in cash, a 16% premium to King Digital’s closing price of $15.54 in New York on Monday.

The boards of both companies have approved the transaction, California-based Activision said. King traded at the equivalent of $17.73 in Frankfurt trading yesterday.

The agreement adds a top mobile publisher to the arsenal of the biggest US video-game maker, positioning Activision to capitalise on growing smartphone-based play.

Mobile gaming is already the industry’s biggest category with revenue forecast to reach $36bn in 2015, according to the companies. That’s projected to grow by more than 50% by 2019.

Activision chief executive Bobby Kotick, who won independence from Vivendi in 2013, has guided the stock to a 72% increase this year, third-best in the Standard & Poor’s 500 Index.

How ‘Candy Crush’ can serve as Activision's route to mobile gaming https://t.co/KtdF09JB2r pic.twitter.com/SoFzAGRXHu

— Financial Times (@FT) November 3, 2015

“We’re serving half a billion players a month,” said Mr Kotick of the combined companies. “Other than YouTube and Facebook, there isn’t a bigger network for entertainment.”

Activision said it will use $3.6bn of cash stored outside the US, and borrow the rest. Activision earned 2c per share after adjustments on sales of $1.04bn. Both numbers exceeded analysts’ estimates.

The deal will boost Activision’s estimated non-GAAP revenue and earnings-per-share by about 30% in 2016. Moody’s Investors Service upgraded Activision’s credit rating to investment grade.

King, based in Dublin, will continue to be run by chief executive Riccardo Zacconi as an independent unit of Activision with the deal expected to be completed by spring 2016.

The Activision bid price of $18 is 20% below the $22.50 paid by investors in King’s 2014 IPO. While the developer scored big with ‘Candy Crush’, it has struggled to create a successor to that blockbuster.

King makes two of the five highest-grossing mobile games in the US,‘Candy Crush Saga’ and ‘Candy Crush Soda Saga’. The company has a market value of $4.9bn. King’s adjusted revenue has fallen in each of the past four quarters.