Activision Blizzard, the company behind hit video games "Call of Duty" and "World of Warcraft," expands and cements its place in the gaming industry by acquiring "Candy Crush Saga" developer King Digital Entertainment for a whopping $5.9 billion, Reuters reports.
The deal is one of the largest ever seen in recent years, even topping Microsoft's $2.5 billion deal to buy Mojang, the developer of hit video game "Minecraft."
Fortune notes that since King Digital went public in 18 months, the company has seen a decline by 20 percent from its initial worth of about $7 billion. Activision bought King Digital at $18 per share, which is lower than its public offering in 2012 of $22.50, per Reuters.
King Digital's stocks have been in peril since investors perceive that the "Candy Crush Saga" developer is just a one-hit wonder. And even though the company has developed other games such as "Farm Heroes" and "Pet Rescue," these did not match the success of "Candy Crush." According to Fortune, King's 500 million monthly active users has been declining, which, in turn, resulted to the developer's decline in revenue.
But why did Activision Blizzard acquire a "one-hit wonder" company?
In a statement by Activision Blizzard CEO Bobby Kotick, per TIME, the executive explained that the company's recent move is to solidify the company's position as the leading business in the gaming industry.
“The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment", Kotick said. “With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before.”
Analysts for Cowen & Co, per Reuters, also said that Activision Blizzard's deal is "an absolute steal. According to them, "The combination increases Activision's scope and scale, but more importantly gives the company another top-quality IP (intellectual property) creator."
By buying King Digital, the "Call of Duty" developer can also put an answer to its weakness in the mobile market. Mobile gaming is expected to blow up to 21 percent ($20.6 billion) this year, per Newzoo via Reuters. This means that Activision Blizzard is gearing up for the future and won't back down to increase sales, even if it takes $5.9 billion to buy one of the most famous mobile game developers in the market.
Will the buyout prove useful to Activision Blizzard or will it just be a lost investment?
