Activision Blizzard Agrees to Acquire King Digital Entertainment -- Update
November 03 2015 - 1:07AM
Dow Jones News
By Sarah E. Needleman
Activision Blizzard Inc. late Monday said it is acquiring King
Digital Entertainment PLC for $3.4 billion in cash plus debt,
combining two giants in the videogame industry.
King shot to fame in 2012 with its hit "Candy Crush Saga,"
helping to position casual and inexpensive smartphone apps as a
viable alternative to pricier games played on TVs and personal
computers. While many of King's other mobile games haven't reached
the same level of success, "Candy Crush" and its sequel are still
among the top-grossing apps on Apple Inc.'s App Store.
Activision said it is paying $18 a share, a 20% premium to
King's 4 p.m. ET price of $14.96 on the New York Stock Exchange on
Oct. 30. On Monday, King shares rose 3.9% to $15.54. Activision
said the deal has a total equity value of $5.9 billion.
In announcing the deal, Activision reported a profit of 21 cents
a share, compared with 23 cents a year earlier. Analysts had
expected profit of 15 cents a share, according to Thomson Reuters.
The company also generated $1.04 billion in revenue, down from with
$1.17 billion a year earlier, but above Wall Street's expectation
of $951.7 million.
The deal for King is Activision's latest effort to grow beyond
the living room game system. Last month, the company announced the
launch of a new division dedicated to competitive videogames, or
so-called e-sports.
The deal gives Activision, a powerhouse in console videogames
with franchises such as "Call of Duty" and "World of Warcraft," a
beachhead in the fast-growing business of smartphone gaming. King
shot to fame in 2012 with its hit "Candy Crush Saga," helping to
position casual and inexpensive mobile apps as a viable alternative
to console and personal-computer games.
Activision said the deal, which is taking place through a
subsidiary ABS Partners C.V., will be accretive to 2016 adjusted
revenue and per-share earnings by about 30%. The companies will
have a combined active monthly user base of nearly 550 million,
Activision said.
Activision Blizzard has more than 7,500 employees world-wide and
is based in Santa Monica, Calif.
King, which is based in the United Kingdom and has 1,600
employees, will continue to operate as an independent unit under
Chief Executive Riccardo Zacconi, Activision said in its prepared
statement.
"We are largely using cash on the balance sheet," Activision
Chief Executive Bobby Kotick said in an interview. He said that the
deal, which has its origins in a meeting between the companies
three years ago, is Activision's second largest after Blizzard
Entertainment.
Mr. Zacconi, in the interview, said the deal acquisition
represents an opportunity to extend its user base beyond its
stronghold of women and casual gamers.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 03, 2015 00:52 ET (05:52 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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