Why Activision Is Buying Candy Crush Creator for $5.9 Billion

3 Nov 2015 | Author: | No comments yet »

Activision Blizzard Stock Swings on $6 Billion King Digital Deal.

Los Angeles: Activision Blizzard Inc. agreed to buy King Digital Entertainment Plc for $5.9 billion, unifying console and PC games Call of Duty and World of Warcraft with the leading mobile game Candy Crush Saga. The deal which still has to be approved by King’s shareholders as well as legal authorities and regulators, will give the combined group more than 500 monthly active users across almost 200 countries. Activision will use approximately $3.6 billion of offshore cash on its balance sheet to fund the deal, along with $2.3 billion in debt financing under existing credit agreements.

Also Monday, Activision posted better-than-expected financial results for the third quarter of 2015, and raising expectations for Q4 and full-year 2015 earnings. The agreement adds a top mobile publisher to the arsenal of the biggest US video-game maker, positioning Activision to capitalize on growing smartphone-based play. Activision chief executive officer Bobby Kotick, who won independence from Vivendi SA in 2013, has guided the stock to a 72% increase this year, third-best in the Standard & Poor’s 500 Index. On Monday, Moody’s Investors Service upgraded Activision Blizzard’s debt rating to investment-grade, citing the company’s strong position in gaming and said its long-term outlook is stable with the planned King acquisition. King, based in Dublin, Ireland, will continue to be run by CEO Riccardo Zacconi as an independent unit of Activision with the deal expected to be completed by spring 2016.

Its shares, which rose steadily in October, advanced 3.9% on Monday, giving the company a market value of $4.9 billion, according to data compiled by Bloomberg. King Digital’s adjusted revenue has fallen in each of the past four quarters while gross bookings, another measure of online sales, dropped 13% to $529 million in the second quarter.

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