How Much Did Activision Pay for King?
Activision Blizzard, a leading video game developer and publisher, acquired King Digital Entertainment, the renowned developer of Candy Crush and other popular mobile games, in 2016. The acquisition deal was announced in November 2015 and was valued at $5.9 billion. In this article, we’ll delve into the details of the acquisition, exploring what led to the deal, the implications for both companies, and the financial details of the transaction.
Background: King Digital Entertainment
King Digital Entertainment, founded in 2003, is a leading mobile game developer and publisher known for its hit titles, including Candy Crush Saga, Farm Heroes Saga, and Bubble Witch Saga. The company had established itself as a dominant player in the mobile gaming market, with a portfolio of over 200 games and a large user base.
Background: Activision Blizzard
Activision Blizzard, a subsidiary of Activision Inc., was founded in 2008 through the merger of Activision and Vivendi Games. The company is known for its diverse portfolio of video games, including Call of Duty, World of Warcraft, and Overwatch. Activision Blizzard is one of the largest and most successful video game companies in the world, with a market capitalization of over $60 billion.
Acquisition Rationale
In 2015, Activision Blizzard began exploring acquisition opportunities in the mobile gaming space to expand its presence in the rapidly growing market. King Digital Entertainment’s success and reputation in mobile gaming made it an attractive target for Activision Blizzard. The acquisition allowed Activision Blizzard to:
• Diversify its portfolio: By acquiring King, Activision Blizzard could expand its presence in the mobile gaming market, diversifying its revenue streams and reducing its dependence on console gaming.
• Strengthen its position: The acquisition gave Activision Blizzard access to King’s popular titles, such as Candy Crush, and its large user base, further solidifying its position as a leading game developer and publisher.
• Increase its global reach: King’s global user base and distribution network provided Activision Blizzard with opportunities to expand its reach and increase its presence in new markets.
Financial Details
The acquisition deal, announced in November 2015, was valued at $5.9 billion. The price consisted of:
• $4.4 billion in cash
• $550 million in shares of Activision Blizzard
• $750 million in net cash that King Digital Entertainment had at the time of the acquisition
The deal was expected to be accretive to Activision Blizzard’s earnings in 2017 and 2018.
Post-Acquisition Integration
The acquisition led to significant changes within both companies. Activision Blizzard integrated King Digital Entertainment into its operations, with Riccardo Zacconi, the co-founder and CEO of King, serving as a key advisor to Activision Blizzard. The acquisition allowed King to leverage Activision Blizzard’s expertise in game development, marketing, and distribution, while Activision Blizzard gained access to King’s mobile gaming expertise and intellectual property.
Conclusion
In 2016, Activision Blizzard acquired King Digital Entertainment for $5.9 billion, expanding its presence in the mobile gaming market and solidifying its position as a leading game developer and publisher. The acquisition allowed King to leverage Activision Blizzard’s resources and expertise, while Activision Blizzard gained access to King’s popular titles and user base. The deal has been credited with enhancing Activision Blizzard’s growth prospects and providing a competitive edge in the rapidly evolving gaming industry.