Activision buys Candy Crush creator King Digital for $5.9B

Acquisition unifies two of the biggest game makers as mobile gaming takes off with consumers.

One of the biggest names in video games is getting even bigger.

Activision Blizzard announced late Monday it had agreed to acquire King Digital Entertainment, the maker of the enormously popular Candy Crush Saga mobile games, for $5.9 billion.

The acquisition combining one of the largest names in mobile gaming with Activision, the company behind popular military shooter franchise Call of Duty and the fantasy game World of Warcraft, as mobile games are experiencing explosive growth in popularity.

Spending on mobile gaming titles is expected to hit $29 billion this year, according to research from intelligence firm Digi-Capital. By 2018, revenue from mobile games is expected to reach $45 billion, the researcher said in May.

“Mobile gaming is the largest and fastest-growing opportunity for interactive entertainment and we will have one of the world’s most successful mobile game companies and its talented teams providing great content to new customers, in new geographies throughout the world,” Robert Kotick, Activision’s CEO, said in a statement.

Founded in 2003, King relies on the so-called freemium business model, which allows games to be played for free but charges for additional features or virtual goods. Although King has more than 180 games to its name, the crown jewel in its lineup is Candy Crush Saga. That title, according to the company, has 158 million daily users and more than 1 billion daily game plays.

The social-gaming company has Facebook to thank for much of its success. “Candy Crush Saga” was originally designed to be played on the social-networking giant’s website before it was released for mobile devices.

Released on the social network in April 2012, Candy Crush quickly rose in the social gaming ranks, helped in part by a mobile launch in November 2012 on Apple’s iOS operating system and on Google’s Android OS a month later. A year after its release, it had surpassed the flagship game from King rival Zygna, FarmVille 2, on Facebook and would go on to be the most downloaded iOS app of 2013.

Activision, which is best known for making games for consoles made by Microsoft, Nintendo and Sony, has been expanding its digital horizons in recent months. The Santa Monica, California-based company has begun shifting its sales to the Internet, which now accounts for three-quarters of the company’s revenue.

Activision will pay $18 a share for the Dublin-based game maker, a 16 percent premium to King Digital’s closing stock price Monday of $15.54. Since going public in March 2014 at $22.50, the company’s stock price has languished in the mid- to low-teens for much of the year.

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