'World Of Warcraft's Activision Blizzard (NASDAQ:ATVI) CEO Thinks Maker Of

'World Of Warcraft's Activision Blizzard (NASDAQ:ATVI) CEO Thinks Maker Of

Activision Blizzard, one of the biggest developers of traditional video games in the world, announced on Monday, November 2, that it has agreed to buy Candy Crush maker King Digital Entertainment for around $5.9 billion as part of its plan to expand its global reach.

The deal is one of the biggest in the industry in recent years, more than twice the size of Microsoft Inc's $US2.5 billion purchase of Minecraft maker Mojang in 2014, and the biggest-ever acquisition of a mobile gaming company. When Pet Rescue Saga and Farm Heroes failed to achieve the same level of success, investors started assuming that King Digital Entertainment was a "one-hit wonder".

Activision Blizzard, the company which produced "World of Warcraft" and "Call of Duty", is purchasing the creator of "Candy Crush Saga", King Digital Entertainment. The shares opened for trading at $33.35 and hit $37.8 on the upside, eventually ending the session at $35.82, with a gain of 3.62% or 1.25 points.

As per Activision, the mobile gaming industry is expected to generate $36 million in revenues by 2015, and from 2015 to 2019, it is expected to register a cumulative growth of 50%. Activision said it believes the addition of the King's line of games will position it "as a global leader in interactive entertainment across mobile, console and PC platforms".

For the quarter ended September 30, 2015, Activision Blizzard's GAAP earnings per diluted share were $0.17, as compared with a loss of $0.03 for the third quarter of 2014.

Activision's games, on the other hand, are played on pricy video game consoles or computers.

"You must be convinced that the title or derivatives of that title are going to be incredibly profitable given how much they are paying", he said. It will have a few 500 million active monthly users around the world. It will be completed in Spring 2016.

About 70 percent of King's daily active users reportedly come from Candy Crush.

Activision would fund the deal using cash and equivalents of $3.6 billion held outside the USA, and the remaining through an incremental debt from Goldman Sachs Bank and Bank of America Merrill Lynch.

While both company's board of directors unanimously approved the acquisition, it is still "subject to approval by King's shareholders and the Irish High Court, clearances by the relevant antitrust authorities and other customary closing conditions".

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