(AP) – Activision Blizzard will pay $5.9 billion to buy Candy Crush maker King Digital Entertainment, combining a console gaming power with an established player in the fast-growing mobile gaming field.
Activision, which owns the extraordinarily successful “Call of Duty” series, said the deal will create one of the largest global entertainment networks with more than half a billion combined monthly active users in 196 countries.
King has struggled to follow up on the success of its Candy Crush series. Its revenue fell 18 percent to $490 million in the second quarter, and gross bookings also dropped 13 percent, both of which the company attributed to the maturing of its Candy Crush franchise.
Still, the game remains so pervasive it is difficult to avoid another person immersed in the game on any given day. A British lawmaker was recently admonished after being caught playing the game during a committee hearing in Parliament.
Getting games out of the living room and into the hands of potential players through smartphones is the ultimate goal for Activision, which is seeking entry into a sector with seemingly unlimited growth potential.
Activision said mobile gaming is expected to generate more than $36 billion in revenue by the end of 2015 and grow cumulatively by more than 50 percent from 2015 to 2019.
King had adjusted revenues of $2.1 billion over the past 12 months, the company said.
Jefferies analysts Brian Pitz and Brian Fitzgerald said buying King, based in Dublin, gets Activision into the sector, but said that replicating the success of Candy Crush Saga is a daunting task.
“We expect a heavy dose of skepticism from investors especially given the large deal size,” the analysts wrote.
Activision Blizzard Inc., based in Santa Monica, California, will pay $18 in cash for each King share, a 20 percent premium over its Friday closing price. King is based in Dublin.
The boards of both companies have approved the deal, but King shareholders must still vote on it and regulators in Ireland must also sign off. The companies expect it to close next spring.
Shares of King Digital Entertainment Plc., which went public in March 2014, jumped nearly 15 percent, or $2.31, to $17.85 a couple hours before markets opened Tuesday and after the deal was announced. Meanwhile, Activision shares fell 3.6 percent, or $1.26, to $33.31.