Activision Blizzard, the US-based publisher of Call of Duty video game, has agreed to acquire King Digital Entertainment, the creator of mobile smash hit Candy Crush Saga, for $5.9 billion.
The deal will help Activision boost its mobile games business and create a company with total monthly active users of almost 500 million across 196 countries.
The acquisition is the biggest in the gaming industry since Microsoft’s $2.5 billion purchase of Mojang, the maker of Minecraft, in September last year.
In a stock-market disclosure, Activision said it will pay $18 for each King Digital share. This is 20 per cent higher than King's stock price on October 30.
However, it is lower than King Digital's initial public offering price of $22.50 apiece, a level the shares haven't managed to touch since the company listed on the New York Stock Exchange in March last year. The IPO valued the company around $8 billion.
Activision owns one of the biggest gaming franchises in Call of Duty. The game is played on Microsoft’s Xbox and Sony’s PlayStation consoles. The company also owns World of WarCraft and StarCraft games as a result of its 2008 merger with Blizzard.
“The addition of King’s highly-complementary business will position Activision Blizzard as a global leader in interactive entertainment across mobile, console and PC platforms, and positions the company for future growth,” it said in a statement.
The US company said mobile gaming is the largest and fastest-growing opportunity for interactive entertainment. The segment is expected to generate $36 billion in revenue by the end of this year and grow 50 per cent from 2015 to 2019, it said.
For the year ended September 30, Activision had GAAP revenue of $4.9 billion and King Digital had IFRS revenue of $2.1 billion. For the same period, Activision had GAAP net income of $1.1 billion and King had IFRS profit of $0.6 billion. Candy Crush Saga, the confectionery-themed game, makes up about a third of King Digital’s revenue.
King Digital CEO Riccardo Zacconi and his team will run the company as a separate business within Activision.
The acquisition is expected to be completed by spring 2016, subject to regulatory and shareholder approval.