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Activision to buy maker of ‘Candy Crush’ for $5.9 billion

Activision is paying $5.9 billion to acquire King Digital Entertainment. The move gets Activision further into mobile gaming and access to female users. (Video: Reuters)

One of the oldest names in video games plans to buy a company that has kept mobile users fingers busy for more than three years. Activision Blizzard has announced it will purchase King Digital Entertainment, the maker of “Candy Crush,” for $5.9 billion.

If approved, the new gaming empire — which will include not just “Candy Crush,” but incredibly popular franchises such as “Call of Duty,” “World of Warcraft,” and “Guitar Hero” — will solidify Activision’s “position as the largest, most profitable standalone company in interactive entertainment” with more that 500 million monthly users, according to its chief executive.

“We have long-admired King for consistently creating incredibly fun, deeply engaging free-to-play games that capture the imaginations of players across ages and demographics,” Bobby Kotick, CEO of Activision Blizzard, said in a statement. “Activision Blizzard will provide King with experience, support and investment to continue to build on their tremendous legacy and reach new potential. We share an unwavering commitment to attracting and developing the best talent in the business, and we are excited about what we will be able to accomplish together.”

King, with a market capitalization of under $5 billion, went public just last year, and closed yesterday at $15.54. Though it owns more than 200 titles, it is best known for “Candy Crush,” in which players match candies to achieve a short-lived sense of personal accomplishment.

[Candy Crush: Will Wall Street buy the addictive game?]

“Positive rewards are the main reason people become addicted to things,” Kimberly Young, a professor at St. Bonadventure University who studies Internet addiction, told Time said in 2013.  “When you play the game, you feel better about yourself.”

“Candy Crush” is a game so engrossing that it allegedly led a San Diego man to rupture a tendon in his thumb.

“Before the onset of symptoms, he reported playing a video game on his smartphone all day for 6 to 8 weeks,” according to a Journal of the American Medical Association report of the injury. “He played with his left hand while using his right hand for other tasks, stating that ‘playing was a kind of secondary thing, but it was constantly on.’”

But King “has struggled to create a successor to that blockbuster,” reported Bloomberg, with adjusted revenue falling in each of the past four quarters.

Activision — founded in 1979, a third-party maker of games for Atari, among many other videogame systems — will pay shareholders $18 per share for King. Though King is based in Ireland, tax inversion — through which many companies, such as Pfizer, buy foreign firms to save tax dollars — is not part of the proposed deal.

Activision’s business, valued at more than $25 billion, has been doing quite well. But the move will make the company “a global leader in mobile gaming — the largest and fastest-growing area of interactive entertainment that is expected to generate over $36 billion of revenue by the end of 2015 and grow cumulatively by over 50% from 2015 to 2019,” it said.

This is what Wall Street wanted all along.

“The next year is all about expanding into new genres, business model, and markets for this publisher,” the Motley Fool wrote of Activision last year.

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