Activision Blizzard buys 'Candy Crush' maker in mobile push

Tue Nov 3, 2015 10:13am EST
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By Eric Auchard and Leila Abboud

DUBLIN (Reuters) - Video game maker Activision Blizzard (ATVI.O: Quote) will buy "Candy Crush Saga" creator King Digital Entertainment KING.N for $5.9 billion, as the heavyweight of console and PC-gaming makes a major push into the faster-growing mobile market.

The deal is one of the biggest in the industry in recent years, more than twice the size of Microsoft Inc's (MSFT.O: Quote) $2.5 billion purchase of "Minecraft" maker Mojang last year, and the biggest-ever acquisition of a mobile gaming company.

The failure of Dublin-based King to replicate the success of Candy Crush with follow-up titles such as "Farm Heroes" and "Pet Rescue" has led some investors to think it may be a one-hit wonder.

But Activision, whose shares were down 0.5 percent at $34.43 in early trading, is betting that its experience in sustaining long-running blockbuster franchises like "Call of Duty" and "World of Warcraft" can help it develop new hit series.

Cowen & Co analysts described the deal as "an absolute steal", but others expressed skepticism.

"The combination increases Activision's scope and scale, but more importantly gives the company another top-quality IP (intellectual property) creator," the Cowan analysts wrote.

The deal also gives the U.S. company a major presence in the mobile market, where games sales are expected to grow 21 percent this year to $20.6 billion, according to research firm Newzoo.

That compares with expected growth of 7 percent for computer games and 2 percent for TV and console games, although they will still represent the lion's share of the $91.5 billion overall industry, according to the industry researchers.   Continued...

Mascots dressed as characters from the mobile video game "Candy Crush Saga" pose during the IPO of Mobile game maker King Digital Entertainment Plc on the floor of the New York Stock Exchange March 26, 2014.   REUTERS/Brendan McDermid