Activision Blizzard is to acquire King Digital Entertainment in a deal valued at $5.9bn. Under the terms of a definitive agreement recently announced, Activision subsidiary ABS partners will acquire all the outstanding shares of King for $18 each.
The deal makes Activision Blizzard the world’s top interactive entertainment company across mobile, console and PC platforms. Its portfolio already includes two of the top five highest-grossing mobile games in the US, the world’s top selling console game franchise and the world’s most successful personal computing franchise. Its titles include franchises such as Candy Crush, Call of Duty, World of Warcraft, Diablo, Guitar Hero, Skylanders and Destiny, along with over 1,000 game titles in its library. King has revenues of $2.1 billion after building one of the largest player networks on mobile and Facebook, with 474 million monthly active users in the third quarter 2015.
The combination of the two will create a global entertainment networks of half a billion combined monthly active users in 196 countries in a demographics that includes casual and core gamers, female and male players, and developed and emerging markets. The acquisition gives Activision Blizzard a strong presence in mobile gaming, which is expected to generate over $36 billion of revenue by the end of 2015 and grow cumulatively by over 50% from 2015 to 2019.
Post acquisition, Activision Blizzard will become the most profitable interactive entertainment company in the world, claimed its CEO Bobby Kotick. “With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before,” said Kotick.
Last year Activision Blizzard had non-GAAP revenues of $4.7 billion and King had adjusted revenues of $2.1 billion, and for the same period, adjusted EBITDA of $1.6 billion and $0.9 billion, respectively.
Games market watcher Fabien Nicolas, VP of Marketing Communications & Community at App Annie, said the acquisition shows how mobile has become the vital growth ingredient for games publishers. “Activision has taken a more reserved approach to mobile, releasing only a handful of titles, while global competitors EA and Tencent have embraced this new sector,” said Nicolas. “This acquisition clearly demonstrates a new commitment to mobile for Activision and a need to diversify to a more global female audience.”