Activision Blizzard is making a bet on the future of gaming with its $5.9 billion purchase of Candy Crush-maker King Digital.
The Santa Monica-based video game publisher announced Monday evening that it will acquire all outstanding shares of the mobile gaming company for $18 per share, a premium on King’s $15.54 stock price after the Monday close.
King found a mobile gaming hit in 2012 with the launch of Candy Crush Saga, a freemium game that asked users to match colorful pieces of candy. The success of the game, which received 10 million downloads by December of that year, propelled the company to an initial public offering in 2014 with stock priced at $22.50 a share. As the popularity of Candy Crush has faded over time, the company has had a difficult time duplicating its success. Even so, during the second quarter of the year King brought in $490 million in revenue and had 501 million monthly active users.
Activision, known for its big-budget console franchises including Call of Duty and online games like World of Warcraft, sees in King the opportunity to expand into the fast-growing mobile gaming space, which is projected to generate over $36 billion in revenue by the end of 2015. Activision CEO Bobby Kotick said in a statement that his company has “long-admired King for consistently creating incredibly fun, deeply engaging free-to-play games that capture the imaginations of players across ages and demographics.”
The news was released simultaneously with Activision’s earnings for the third quarter, during which the company had net income of 17 cents per share on revenue of $990 million.
Dublin-headquartered King will continue to be led by CEO Riccardo Zacconi, chief creative officer Sebastian Knutsson and COO Stephane Kurgan and will operate as an independent operating unit. The acquisition is expected to be completed in spring of 2016.
“We believe that the acquisition will position us very well for the next phase of our company’s evolution and will bring clear benefits to our players and employees,” said Zacconi. “We will combine our expertise in mobile and free-to-play with Activision Blizzard’s world-class brands and proven track record of building and sustaining the most successful franchises, to bring the best games in the world to millions of players worldwide.”
Activision shares closed down less than 1 percent to $34.57 on Monday on the Nasdaq.