Activision-Blizzard has entered into a purchase agreement with King, creators of Candy Crush Saga, that, if approved by share holders, will see nearly six billion US dollars spent in the acquisition. King will operate as a wholly owned subsidiary of Activision-Blizzard and places the gaming giant at the forefront of the mobile games market, the fastest growing sector in gaming.
All shares of King's stock will be purchased at $18 per unit for $5.9B and represents a 27% increase over King's average share cost during the preceding three months. The two companies will bring together GAAP revenues of $4.9B for Activision-Blizzard and $$2.1B over the past twelve months. Adjusted profits include $1.1B for A-B and $600M for King.
Activision Blizzard believes that the following points will accelerate Activision Blizzard's strategic growth plan:
- One of the Largest Global Entertainment Networks. This Acquisition will create one of the largest global entertainment networks with over half a billion combined monthly active users in 196 countries. This global audience will reach across casual and core gamers, female and male players, and developed and emerging markets throughout the world. Direct relationships with this large and diverse audience will extend Activision Blizzard's reach, creating opportunities to cross-promote content and engage new players with Activision Blizzard's franchises.
- A New Global Leader in Mobile Gaming. Through this Acquisition, Activision Blizzard will become a global leader in mobile gaming-the largest and fastest-growing area of interactive entertainment, that is expected to generate over $36 billion of revenue by the end of 2015 and grow cumulatively by over 50% from 2015 to 2019.
- Diverse Franchise Portfolio with Leadership Across Key Platforms and Genres. The combined company will have a portfolio encompassing 10 of the world's most iconic interactive entertainment franchises with leading titles including two of the top five highest-grossing mobile games in the U.S. (Candy Crush Saga®, Candy Crush Soda Saga™), the world's most successful console game franchise (Call of Duty®), and the world's most successful personal computing franchise (World of Warcraft®), among others. This world-class collection of games spans genres and platforms, drives deep, year-round engagement, and is well-positioned for continued growth.
- Potential Cross-Network Growth Opportunities. Combining one of the largest mobile gaming communities with Activision Blizzard's leading franchises creates potential opportunities to grow and cross-promote content to a diverse audience, while providing players more opportunities to engage with its content.
- Enhanced Capabilities Across Business Models. The combined company's capabilities across subscription, upfront purchase, free-to-play and micro-transaction business models will accelerate diversification of Activision Blizzard's revenue streams. This expertise across diverse monetization methods will lead to new opportunities to delight players and provide Activision Blizzard with key capabilities to meet evolving player preferences and reach new untapped audiences. The combined company will benefit from King's leading mobile capabilities that can be applied across the portfolio from micro-transactions, game analytics and mobile marketing to increase digital revenues.
- The Most Profitable, Successful Standalone Interactive Entertainment Company in the World. During the last twelve months Activision Blizzard had non-GAAP revenues of $4.7 billion and King had adjusted revenues of $2.1 billion, and for the same period, adjusted EBITDA of $1.6 billion and $0.9 billion, respectively. The combined company will have further diversified and recurring revenues, cash flow generation, and long-term growth opportunities to propel future value creation for shareholders. Activision Blizzard believes the Acquisition will be accretive to 2016 estimated non-GAAP revenues and earnings per share by approximately 30% and significantly accretive to 2016 estimated free cash flow per share. Activision Blizzard expects the combined company to maintain a disciplined capital allocation policy and strong balance sheet.
- Experienced Management Team. King will continue to be led by Chief Executive Officer Riccardo Zacconi, Chief Creative Officer Sebastian Knutsson, and Chief Operating Officer Stephane Kurgan, all of whom have strong expertise and proven track records in mobile gaming and have entered into long-term employment contracts. It is Activision Blizzard's intention that King will operate as an independent operating unit, with enhanced resources to support its industry-leading franchises. Activision Blizzard has a strong integration track record, and implementing the Acquisition as structured will minimize disruption and integration risk while maintaining the spirit of creative independence. The combination unites Activision Blizzard's and King's highly-complementary cultures, with aligned commitment to innovation, deep respect for the creative process, franchise focus, and emphasis on talent development.
You can read much more about the terms of the deal, view events & presentations, filings, fact sheets, and press releases on the Activision-Blizzard acquisition page.
In addition, Activision-Blizzard will be hosting its third quarter 2015 earnings report at 5:00 am Pacific / 8:00 am Eastern today. You can check out the details here.