King Digital Entertainment, the developer behind the Candy Crush mobile game among many other social games, has announced that it has signed a definitive agreement to be acquired by video game publisher Activision Blizzard for $5.9bn (£3.8bn, €5.4bn). ABS Partners, a wholly-owned subsidiary of Activision, will purchase the outstanding shares of King for $18.00 in cash per share.
This price implies a 20% premium over King's closing price on 30 October. However, this price is lower than the $22.50 at which King got listed on the NYSE last year.
Activision believes that the deal will position it as a global leader in interactive entertainment business across mobile, console and PC. The combined company will have a portfolio of top-performing franchises such as Candy Crush Saga, Call of Duty and Diablo Destiny along with over 1,000 game titles in its library.
Bobby Kotick, CEO at Activision said: "The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment." The combined company with more than 500 million monthly active users will increase the company's potential to reach bigger audiences around the world, he added.
For King Digital, the deal will position it well for the next phase of the company's evolution and benefit both its players and employees, according to its CEO, Riccardo Zacconi. Zacconi, along with King's chief creative officer Sebastian Knutsson and COO, Stephane Kurgan, will move onto the combined company after signing "long-term" employment contracts.
King Digital was founded in Sweden in 2003 and has created more than 200 games from offices across London, Dublin and New York. Its most popular game Candy Crush which was first launched on Facebook and smartphones in 2012 still accounts for more than a third of its revenues.
Activision, on the other hand, is better known for console games. Its most popular titles include Call of Duty and Destiny. It entered the mobile gaming space relatively late because of which its net revenues from mobile and other sources, for its second quarter was just 5% in comparison to 54% from console games, its largest contributor.
For the 12 months ended 30 September 2015, Activision Blizzard reported non-GAAP revenues of $4.7bn while King turned in adjusted revenues of $2.1bn.