King Digital (KING) Bought by Activision Blizzard for $5.9 Billion
  PUBLISHED ON: Nov 3, 2015

Shares of King Digital Entertainment (KING) were trading up +2.22 or +14.29 percent to $17.76 per share in Tuesday’s premarket after news late yesterday that the company would be acquired by Activision Blizzard Inc.(ATVI) for $5.9 billion. King Digital Entertainment stock closed at $15.54, up +0.58 or +3.88 percent in Monday’s regular trading session.

Founded in 2003 by Riccardo Zacconi and a group of website developers and investors, Dublin, Ireland based King Digital Entertainment, also known as is a video and social games company.
The company develops games for the Internet, mobile applications on Android, iOS and Windows Phone platforms, as well as being the largest game developer on Facebook (FB). King Digital is best known for its extremely popular game Candy Crush Saga, released in 2012. The company had 474 million monthly users in this year’s third quarter and had net income of $575 million on $2.26 billion in revenue last year.

Santa Monica, California based Activision Blizzard Inc. is the parent company of Blizzard Entertainment and Activision and is the fifth largest gaming company in the world by revenue. The company is the product of the 2007/2008 merger of Activision with Vivendi Games. Activision Blizzard’s most popular games include Call of Duty, Guitar Hero, Skylanders and World of Warcraft to name just a few. The company earned $817 million on $4.41 billion in revenue last year.

The announcement of the signing of the definitive agreement made late yesterday will have ABS Partners C.V., a wholly owned subsidiary of Activision Blizzard acquire all outstanding shares of King Digital for $18.00 per share. The amount represents a +20 percent premium to King’s stock closing price on Friday and a +23 percent premium over the stock’s one month weighted average.

Riccardo Zacconi, Chief Executive Officer of King Digital said in a press release that, “We are excited to be entering into this acquisition with Activision Blizzard. Since 2003, we have built one of the largest player networks on mobile and Facebook, with 474 million monthly active users in the third quarter 2015, and our talented team has created some of the most successful mobile game franchises. 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.”

The combined company will have over half a billion monthly active users in 196 countries, making it one of the world’s largest entertainment networks. King Digital will continue to operate as an independent unit of Activision Blizzard led by Riccardo Zacconi, King Chief Creative Officer Sebastian Knutsson and Chief Operating Officer Stephane Kurgan.

The boards of both companies have unanimously approved the transaction, which is being implemented through a scheme of arrangement under Irish law. The deal is still subject to the approval of King Digital shareholders and the Irish High Court, as well as the customary clearances by antitrust authorities and other closing conditions. The transaction is expected to close by Spring of 2016.

Shares of King Digital are trading higher as expected after the announcement, nevertheless, Activision Blizzard shares are down almost five percent this morning after the company reported a profit of $0.21 per share on $1.04 billion in revenue, beating expectations for the quarter.

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Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2015. Content published with author's permission.

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