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Activision Blizzard To Acquire King Digital For $5.9 Billion

November 3, 2015 - Written By Kishalaya Kundu

American video game publisher Activision Blizzard has agreed to pay a whopping $5.9 billion to acquire Dublin, Ireland-based King Digital Entertainment, best known for its wildly popular mobile game Candy Crush Saga and its successful spinoff, Candy Crush Soda. Activision of course, is one the leaders of the console and PC gaming industry, with its MMORPG offering World of Warcraft and FPS offering Call of Duty being two of the most popular games in their respective genres. While King came out with its IPO (Initial Public Offering) last year and was listed on the bourses at $22.50, Activision will reportedly be paying $18 per share according to the terms of the deal, as reported by Reuters. King meanwhile, has been struggling of late to retain its patrons’ interest in its games, and has seen steadily dwindling revenues from its biggest money spinner, Candy Crush Saga, which follows the ‘freemium’ model, meaning, the game is free to download and play, but serious players will be required to shell-out money on in-game purchases in order to maximize their scores.

While the purchase is yet to clear regulatory hurdles and other formalities, Activision investors are apparently already asking if the Santa Monica, California-based company is overpaying for King in its desperation to gain a foothold in the rapidly-expanding mobile gaming sector, where Activision hasn’t been able to replicate its enormous success in the overall video game market. King Digital entertainment earned combined revenues of $1.4 billion last year, but its net profit has been on the decline of late and in Q2 this year, the company reportedly had revenues of $206 million. The company’s Q3 earnings call is scheduled for Tuesday, November 3rd.

Speaking about the acquisition, the Chief Executive of Activision Blizzard, Mr. Bobby Kotick indicated that buying King will help the company expand its reach into new demographics, seeing as the majority of King’s players are female; which is a key demographic that’s missing from Activision’s customer list at the moment seeing as most gamers on PCs and consoles tend to be overwhelmingly male. According to Mr. Kotick, “You have such broad reach. This is a fantastic opportunity for us to create compelling content for new demographics”. He also made it clear that the makers of Candy Crush Saga will continue to operate independently under the Chief Executive of King, Mr. Riccardo Zacconi, even after the acquisition is finalized.