Activision Blizzard Inc, a leading player in the mobile game publishing giant, is buying King Digital Entertainment Plc, a mobile publisher, for $5.98 billion. After beating the market expectations for third quarter results, Activision has announced its decision of acquiring King. Activision is keen on expanding the mobile gaming activity as the acquisition will create biggest games powerhouse in the world. It's estimated that after the acquisition, it will be next to the market leader Tencent in the global market. The company's stock rose to its all-time high as investors responded positively to the acquisition news.
The acquisition plan of Activision is expected to add to King's games portfolio among the top-grossing apps in the Apple Inc and Google Inc. However, market analysts question that how far Activision helps King develop mobile games at the same level as it does with its own franchise, which is launching new gaming product Call of Duty this week.
Activision has a bank of titles on the mobile games including Hearthstone: Heroes of Warcraft, which is a free game for Android and iOS devices. Activision gives credit to the game that helped increase adjusted digital revenues of $697million, which is a record level for the company.
King is facing stiff competition in the global market from Supercell Oy and Machine Zone Inc. The company considers 'Candy Crush' as profitable and it's gradually being overcrowded. Every day, hundreds of new and free apps are being added to app stores. And only few gaming developers make money.
King develops Candy Crush smartphone games. Activision's stock soared over $37 its highest ever and settled at $35.82 registering a growth of 3.62 percent. Investors are reacted positively to the acquisition news.
Similarly, King's stock also shot up 14.8 percent to $17.84. It's still below the buying price offered by Activision. The offered price stands at $18 per share to King. Activision is investing a total of $5.9 billion in order to strengthen their mobile space business and investors are upbeat over this proposition.
Activision is in the process of developing man projects and investors are looking forward to their launch. Some of the projects include Call of Duty: Black Ops III which will be launched this month.
Activision has announced the new game Starcraft II: Legacy of the Void and this game is scheduled for launch this winter. The company has started receiving preorders for it.
According to IHS Global, the global gaming industry may touch $40-bn mark by 2019. After the acquisition, Activision anticipates that the adjusted revenues may grow 30 percent. However, after the acquisition also, King is expected to function as an independent company.
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