Deal of the Week: Activision Blizzard to Buy King Digital for $5.9B

Announcement Date  November 2, 2015 Acquirer  Activision Blizzard, Inc. (NASDAQ: ATVI) Acquirer Description  Develops and publishes online, personal computer (PC), video game console, handheld, mobile, and tablet games worldwide  Founded in 2008 and headquartered in Santa Monica, California Acquirer Financial  Mkt Cap: $25.6 billion  LTM EBITDA: $1.4 billion Statistics  EV: $24.9 billion  LTM EV / Revenue: 5.4x  LTM Revenue: $4.7 billion  LTM EV / EBITDA: 17.6x Target Company  King Digital Entertainment plc (NYSE: KING) Target Description  Produces and distributes digital games on multiple platforms in the United States, the United Kingdom, Germany, and internationally  Founded in 2003 and headquartered in Dublin, Ireland Target Financial  Mkt Cap: $5.5 billion  LTM EBITDA: $733.5 million Statistics  EV: $3.9 billion  LTM EV / Revenue: 1.8x  LTM Revenue: $2.1 billion  LTM EV / EBITDA: 5.3x Acquirer Advisors  Goldman Sachs and Bank of America Merrill Lynch Target Advisor  J.P. Morgan Price / Consideration  Price: $5.9 billion  Consideration: Cash Rationale  "The combination increases Activision's scope and scale, but more importantly gives the company another top‐quality IP (intellectual property) creator," Cowan & Co. 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  “Mobile gaming is the largest and fastest‐growing opportunity for interactive entertainment and we will have one of the world’s most successful mobile game companies and its talented teams providing great content to new customers, in new geographies throughout the world,” Robert Kotick, Activision’s chief executive, said in a statement. Deal Points  $18 per share in cash, representing a premium of 16% to King's close on Monday Of Note  The deal is one of the biggest in the industry in recent years, more than twice the size of Microsoft’s $2.5 billion purchase of "Minecraft" maker Mojang last year, and the biggest‐ever acquisition of a mobile gaming company  At a price tag of $18 a share, King will sell at a discount to the $22.50 a share that it fetched during its initial public offering last year  So far, King Digital’s Candy Crush has remained a steady performer, ranking third in the Apple app store’s top‐grossing games three years after its release. But the company has said that the juggernaut has slowed down, and other games are not as popular

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