While Activision Blizzard is at the forefront of PC and console gaming, the company had yet to make its mark in the world of mobile gaming. The acquisition of King Digital, which has excelled in mobile gaming, with more than 474 million monthly active users, gives Activision a strong mobile portfolio. However, being the leader in gaming comes with a hefty price tag.
"The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment," Bobby Kotick, chief executive of Activision Blizzard, said in a statement late Monday. "With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before."
Despite a strong portfolio of game franchises, including "Call of Duty," "World of Warcraft" and "Diablo," Activision Blizzard has lagged behind when it comes to creating and adapting games to meet the demand of mobile users.
Under the terms of the deal, Activision Blizzard will pay $18 per share -- which is $4.50 lower than King Digital's IPO price last year. The company debuted on the New York Stock Exchange in March 2014.
Once the acquisition is finalized, King Digital will operate as an independent unit within Activision Blizzard. It will continue to be led by chief executive officer Riccardo Zacconi, who said in a statement he believed the deal "will position us very well for the next phase of our company’s evolution and will bring clear benefits to our players and employees."
The deal is a sweet one for Zacconi and his team, who have faced pressure from investors in the past year to prove the company is more than just a one-hit wonder.
"We will combine our expertise in mobile and free-to-play with Activision Blizzard’s world-class brands and proven track record of building and sustaining the most successful franchises, to bring the best games in the world to millions of players worldwide," he said.