King’s stock price has been under pressure in part because investors are concerned that it could be a one-hit wonder, or that its games might fade in popularity over time. At that point, King was worth about $7 billion.
As the latest in a series of foreign takeovers, the King deal may reignite the debate over Europe’s ability to create long-lasting independent internet companies to rival those of Silicon Valley.The purchase price of $18 a share amounts to a premium of about 16% over the recent closing price for King’s stock (KING)-but it’s about 20% lower than the price at which the company went public 18 months ago. Overall consumer spending on King’s titles fell 13 per cent year on year in the second quarter.įor Activision, the acquisition promises to be the most transformative since its $18.9bn combination in 2008 with Blizzard, the World of Warcraft maker then owned by Vivendi Games.īacked by an investor group that included Mr Kotick and Chinese internet group Tencent, Activision bought itself out of Vivendi, the French entertainment group, in an $8.2bn transaction in October 2013.Ī handful of titles including Candy Crush, Supercell’s Clash of Clans, Machine Zone’s Game of War and Minecraft account for a disproportionately large amount of global consumer spending on smartphone games.Įven some pioneers of mobile gaming such as Rovio, maker of Angry Birds, have struggled to build a steady business in a hits-driven market where consumer tastes can be fickle.įor the UK’s tech industry, the deal is the biggest since Hewlett-Packard’s ill-fated acquisition of Autonomy in 2011. King was founded in Sweden in 2003 and has created more than 200 games from offices straddling London, Dublin and New York.Ĭandy Crush, which was first launched on Facebook and smartphones in 2012, still accounts for more than a third of the company’s revenues. “I think this is a deal which makes sense for investors and it makes sense from a strategic point of view for the business,” said Mr Zacconi. King and Activision’s management first met three years ago but talks began in earnest in April, as King’s shares traded roughly 25 per cent below their IPO price. Video: Business tips from Candy Crush maker
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