Activision Blizzard to Acquire King Digital, Maker of Candy Crush

Posted by at 9:44 pm on November 2, 2015

Candy CrushOne of the biggest names in traditional video games is making its boldest step yet into the fast-growing world of mobile gaming with the multibillion-dollar acquisition of a onetime darling. Activision Blizzard said late on Monday that it planned to buy King Digital Entertainment, the home of Candy Crush Saga, for about $5.9 billion to help expand its global reach.

At a price tag of $18 a share, King will sell at a discount to the $22.50 a share that it fetched during its initial public offering last year. When the game developer went public, it was greeted with considerable enthusiasm largely on the strength of Candy Crush, where players match three or more matching candies.

King’s hook was in the title’s so-called freemium model, where the game was largely free to play, but additional content or virtual goodies cost real money.

But during the run-up to King’s stock sale, however, the company faced questions about whether it could duplicate the success of its biggest hit, one responsible for a roughly 7,000 percent jump in annual profit. So far, Candy Crush has remained a steady performer, ranking third in the Apple app store’s top-grossing games three years after its release. But the company has said that the juggernaut has slowed down, and other games are not as popular — not even Candy Crush Soda, a related title released last year.

That lack of success in conjuring a new hit has weighed down King’s profit, which fell 28 percent in its second fiscal quarter from the same time a year ago, to $119 million.

Shares in the company have fallen 30 percent below their offer price, closing on Monday at $15.54 each. (They rose 4 percent on the day, though the reason is unclear.)

Yet the declining performance of Candy Crush and other King titles did not deter Activision from a deal, according to executives from both companies. Activision saw value in King’s network of players, which when combined with its own would yield an audience of more than 500 million unique users each month — bigger than Twitter’s base.

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