Activision Blizzard and King Digital Entertainment plc (King) today announced the signing of a definitive agreement under which ABS Partners, a wholly owned subsidiary of Activision Blizzard, will acquire all of the outstanding shares of King for $18.00 in cash per share, for a total equity value of $5.9 billion.
The $18.00 per share purchase price implies a 20% premium over King's 30 October 2015 closing price, a 26% premium over King's 30 October 2015 enterprise value (which excludes net cash), a 23% premium over King's one month volume weighted average price per share and a 27% premium over King's three month volume weighted average price per share.
The boards of directors of both Activision Blizzard and King unanimously approved the Acquisition, which is being implemented by means of a scheme of arrangement under Irish law. The Acquisition is subject to approval by King's shareholders and the Irish High Court, clearances by the relevant antitrust authorities and other customary closing conditions, and it is currently expected that the Acquisition will be completed by Spring 2016.
Activision Blizzard hinted that mobile business models and practices from King will be applied to various franchises across the two companies' combined portfolio, "from micro-transactions, game analytics and mobile marketing to increase digital revenues."
Financial analysts are divided on the deal's value for Activision. Some believe that Activision has bought King for a steep price right before its value would've started to go down. While others believe that this purchase was necessary to diversify the company's products and to eat a slice of the lucrative mobile games market.
"There is some concern that ATVI has made an expensive purchase of a company at its peak."
-- David Cole, DFC Intelligence
"We think that the King acquisition was clearly at a premium and goes against the trend of buying a company at their peak to buy market share. The track record for these type of acquisitions is not strong so it strikes us as expensive and risky."
-- Ben Schachter, Macquarie Research
"People who think the $5.9 billion valuation is too high are wrong. With game publishers becoming true cross-screen and transmedia companies, this is a huge move that will give Activision Blizzard a unique reach across all screens on a global scale. Having King’s experience in running and monetizing mobile games as a service will be a priceless asset to a company that is still on the learning curve when it comes to mobile."
--Peter Warman, Newzoo CEO
"King is past its peak success. The company has seen its revenue decline for both the last two quarters. However, King remains highly profitable which will significantly boost Activision’s overall margins and will give Activision immediate access to a new $1bn+ franchise, which is anchored in the mobile market where to date it has modest exposure."
-- Piers Harding-Rolls, Head of Games at IHS Technologies
"Activision bought King to appease a Wall Street that expects every game publisher to be heavily into mobile -- see the Nintendo stock jump on the original DeNA announcement. In that sense, it was a wise purchase -- but it would have been wiser to spend $500 million trying to make mobile work over the last 8 years rather than $6 billion in 2015."
-- Ben Cousins, CEO of The Outsiders and former DeNA, DICE exec
