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 ABS Partners CV, a unit of Activision Blizzard, will acquire King
shares for $18 each in cash, representing a premium of 16 percent to
King's closing price on Monday.
The addition of King's mobile games will position Activision as a
global leader in interactive entertainment across mobile, console
and PC platforms, Activision said in a statement.
Video game publishers are shifting to the lucrative digital business
from physical sales of games as consumers shift from consoles to
playing on smartphones and tablets.
The fast-growing mobile gaming segment is expected to generate more
than $36 billion in revenue by the end of 2015, according to
Activision.
Activision Blizzard Chief Executive Bobby Kotick told Reuters that
buying King will help broaden the reach of its games and expand into
new demographics, adding that 60 percent of King's players are
female and that no gaming consoles or hardware, besides a phone, is
needed to play King's games.
"You have such broad reach. This is a fantastic opportunity for us
to create compelling content for new demographics," Kotick said.
Activision, which owns popular game franchises such as "World of
Warcraft," "Call of Duty," and "Diablo," said the deal gives the
combined company more than 500 million monthly active users across
the world and would add to Activision's estimated 2016 adjusted
revenue and earnings by about 30 percent.
Dublin, Ireland-based King will continue to operate as an
independent operating unit led by Chief Executive Riccardo Zacconi.
Zacconi told Reuters that Activision appealed to him because of the
company's expertise in building long-lasting franchises.
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King, which went public last March, has been struggling to boost
bookings - an indicator of future revenue.
The deal, expected to be completed by spring 2016, is subject to
approval by King's shareholders and the Irish High Court, and
clearances by antitrust authorities.
Activision said it will use $3.6 billion of offshore cash and borrow
the rest from Bank of America Merrill Lynch and Goldman Sachs Bank
as incremental lenders.
Activision also reported third-quarter earnings of 17 cents per
share, compared with a loss of 3 cents a year earlier. Excluding
items, it earned 21 cents per share. Revenue rose 31 percent to $990
million. Analysts had expected earnings of 15 cents a share, on
revenue of $950.4 million.
(Reporting by Supriya Kurane in Bengaluru and Liana Baker in New
York; Editing by Gopakumar Warrier)
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