Activision Blizzard to acquire King Digital for $5.9B

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Credit: King

Activision Blizzard has agreed to acquire King Digital, the company behind the popular “Candy Crush” line of mobile games, for approximately $5.9 billion. That’s $18 per share: 20 percent more than its October 30 closing share price. Is the company really that desperate to break into the mobile gaming market?

That’s what it looks like. In the press release announcing the deal, Activision Blizzard trumpets the potential for the acquisition to give it control over the most popular franchises on mobile devices, game consoles, and PCs. (Those being “Candy Crush,” “Call of Duty,” and “World of Warcraft,” respectively.)

Activision Blizzard chief executive Bobby Kotick also praised King’s leaders for “consistently creating incredibly fun, deeply engaging free-to-play games that capture the imaginations of players across ages and demographics.” The hope is to marry those strengths with the stability a much larger company can offer.

The acquisition could also remove the pressure for King to create a followup that can match “Candy Crush” in popularity and profits. While the game is still popular, it’s starting to lose players, and King’s profit fell 28 percent in the second fiscal quarter at least partly because its other games aren’t as lucrative.

This buyout could prevent King from becoming the next Zynga or Rovio. Both of those companies found success on the back of one title (“Farmville” and “Angry Birds”) and both faced varying degrees of adversity when those games fell out of favor. King could’ve been next if “Candy Crush” continued to fall.

Now it can avoid that catastrophe. The question hasn’t become whether or not King will fail; it’s now whether the company will be an albatross hung around Activision Blizzard’s neck, or whether it will be a lifting breeze that allows its new owners to reach new heights in the mobile and social gaming markets.

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