Activision Blizzard Acquires Candy Crush Developer King for $5.9 Billion

@dudeglove: Activision did have some presence here already before this. They own Demonware who are located in Dublin and they've got QA testers and localization in the same building I believe or at least on the same street. Blizzard have their GM centre down in Cork too.

And I agree that they've had an impact on the economy here for the worse. Certainly doesn't help when they open up shop here, import workers (legally of course) then close up shop and everyone either goes back home or moves with them, leaving us stuck picking up the pieces.

Oh, i did not know that, thanks!

As a shareholder in Activision... I'm very pleased with the purchase... Caused the stock to slump hard (to rebuy more) then skyrocket!

Just business as usual, though with bigger numbers...

Fuck all these tax evaders. The worst part is Activision isn't even anywhere close to being the worst offender in this regard: Apple - $181bn offshore, Microsoft - $108bn offshore, GE - $119bn offshore. All in all Fortune 500 companies are holding over $2.1 TRILLION dollars in offshore accounts. The American people are being robbed of $600+ billion in tax revenue because of these greedy cunts which could easily cover free college tuition for all ($70 billion dollars), go towards infrastructure, paid parental leave, etc. And no, these boatloads of cash are not being used to increase wages or create new jobs, they are simply being hoarded and used to benefit the already filthy rich.

Not to mention these tax laws were written expressly for these companies through lobbying congress.

@nasar7: Don't forget Google. They also do it.

@jschlic: Oh right, it didn't occur to me that the might be publicly traded for some reason. That's sort of obvious in hindsight.

@jesus_phish:Huh, that's an interesting (slightly frightening) way to skirt privacy agreements where a company says it won't sell your data. They don't have to if they just sell the whole company, data included.

Awe, poor King. (Tekken King, not the company)

Hoo boy, that's a lot of coin!

I've got to be the heel here, I've always been critical of Blizzard and Activision. "Creatively bankrupt cash grab" has been my take on most products from either of them for quite some time.

All they need to do now is merge with EA and Ubisoft to form the true Axis of Evil.

Austin's comments on corporate taxes remind me why I quit listening to the Beastcast. I'm sure CBS, like all for-profit companies, also seeks to minimize their tax burden.

One thing that makes the price go down smoother for Activision, besides the tax savings Austin mentions: while the price is $5.9 billion, King actually has about $1 billion in its coffers that will be worked into the Activision economic system once the deal closes.

If there's so much advertising dollars out there, I'd like to announce that I'm available to run nude across the Super Bowl field with your companies logo painted to my bald head for a mere 1 million dollars (also, purchaser is required to provide Super Bowl tickets). Just think of the countless views your company's logo will be involved in as this video makes the endless rounds through the interwebs. Drop me a PM if you're interested.

@hassun: FYI, this is not tax evasion. It's called tax avoidance. The difference? One's illegal, the other is a facet of running a business. I'm getting my MBA right now, this is harped on a lot.

Now as to whether or not you believe it to be ethical that's up to you and who you vote for. I'm simply stating that this is how things are.

@nasher27: You're right, sorry.

I misread that secondary headline and thought Austin was implying that Bobby Kotick's ancestors were slave owners. I was wrong, and it turns out that Kotick is just laundering 5B in assets. This is the kind of stuff that causes the IRS brass to age prematurely.

I've done a bit of work in mergers and acquisitions and company valuations, and the trick is, in the end, something is only worth what someone is willing to pay for it. That being said, there is some logic behind these insane numbers.

Traditionally, in asset based business, companies are worth assets+predicted future income, calculated out as a perpetuity, or out to a fixed point in the future. Anything above and beyond this valuation is considered goodwill, and is accounted for as the value of the brand name, brand recognition, etc.

With tech and IP based companies, things get a little trickier with valuations because they rely on uncertainties, the most uncertain of these is potential.

From a venture capital point of view, crazy valuations come from what a VC will put into a firm, and what % of ownership the firms owners are willing to relinquish. For example, a VC that offers $1M for a 50% stake in a company is basically valuating the company at $2M. If you watch dragons den, you'll be very familiar with this concept.

The valuations that VCs come up with when wanting to invest, or what other companies come up with for buyouts? Well, it's not an exact science, and many other methods of valuation can come into play.

I'm going to take an educated guess and say that the King valuation was similar to how Twitter was valued a few years ago. That is, company assets+revenue streams+goodwill, plus customer potential. In twitters case, they didn't have any current revenue streams, so they have to average out what they can potentially make off of each user in the future, and multiply that by the user base.

In this case, they are valuing each user at an average of about $12.50 over the life of a given user (ignoring current fixed assets). That's a pretty high estimate for a F2P game, so in that figure they are likely including potential earnings above and beyond future Candy Crush purchases, such as the value of 475M user profiles/demographics, and the ability to directly market and cross sell to these users.

Sign up for WoW and get a free Charm of Frozen Time. Sign up for candy crush and get a candy mount in WoW!

Edit: Also mentioned by other users, profit multipliers are usually used as shorthand by analysts, and as sanity checks. King was a sitting duck for this kind of deal being this cash rich. Shareholders hate it. Huge companies love acquiring patriated liquid assets, especially when much of their assets are held offshore. Apple has a similar problem, and look to them to buy something big(ish) soon.

It's a facet of running a business because it's legal but legality isn't a constant. It can be temporary. I see this as an abuse of the rules. It should be illegal. Not in its entirety since it's important for businesses to grow and exist in other countries but this kind of stuff isn't fostering that. There is growing your business and their is exploiting the rules.

Not exactly. When Microsoft bought Minecraft, $1.8b of the total $2.5b was 'goodwill'. That's not an asset! King's own accounting valued their assets at $1.2b as of 2Q this year, so Activision can't claim they're now worth 5x that.

How has "the time passed"? Phones are not going anywhere, the market just gets bigger and more international.

Look, Activision is in business to make as much money at as little cost as they can. You can't fault a business for not looking to basically throw away its free capital (in taxes). They made a good business decision. I applaud Activision for making a deal which has caused my investment in their stock to rise faster than a pubescent teenager at a beauty pageant.

I'm glad that this decision has benefited you but I will absolutely fault them. That is a horrible argument. A businesses only goal isn't making money. A business, when run correctly, is an extremely complex thing with many different goals and isn't only about benefiting itself. Much like how human beings like you and me shouldn't only be focusing on our own benefit but helping those around us as much as we can.

They're part of an enormous problem that fucks over actual honest tax payers. Activision, Microsoft, Google, Apple, etc. can play Scarface all they want to avoid paying taxes they're more than capable of paying but by no means does the legality of this make it okay. They're doing something wrong. It's clear as day to me.

Garrison followers, now with micro transactions! /shrug

Making money is a vague term that arguably encompasses establishing sustainability and / or growth. As for the tax fiddles, everybody does it. The laws would need to be have a titanium rigidity to them to prevent such chicanery. Doesn't make it right but it really is up to legislators to get that locked down.

6 billion /474 million = $12.6 per user.

This looks like a good investment on the surface, but doesnt only a small proportion of the candy crush and free to play user base in general, actually pay real money?

If that number is 10% then already each of those users needs to be making $100 net (after costs/overheads are deducted) to pay off just this investment.

Im sure they have plans to find ways to squeeze the casual market, and of course they can sell ads to get money from the non paying customers, but surely its a risk if the next flappy bird takes 300m of those casual users somewhere else. This is not exactly a hardcore crowd who are looking for a niche experience, the only thing keeping them playing is complacency.

Gross.

I really wish Activision would take Blizzard out of the company name, because all the shit they do and crap games they publish reflects poorly on a once (and still mostly) great developer.

*edit* I just remembered the Disney deal where they bought all of Star Wars, Lucas Arts, etc. was only 4.9 billion. They definitely got the better deal.

Holy cow, baffling when put into context of the Disney deal.

I think there are a lot of levels to this in comparison to something like Disney's Star Wars purchase (or heck Marvel in hindsight). One, Disney got sweet deals in those purchases. That was said back then as both parties were looking for what Disney could provide their properties and it looked to be a fruitful merger of IP's and distribution/production/marketing machines.

While Star Wars MIGHT make let's say 1.1 billion (to throw out a relevant Beastcast back of napkin number) in a year on average from movies (if Star Wars gets up to putting out 1 a year like the plan says and expecting the side movies to do a bit less as there is no track record for those kinds of movies blowing up the BO), the REAL money, the money Lucas was a visionary in negotiating the rights for way back with Star Wars, is the merch and licensing. That has gotta blow out of the water even blockbusting mega movies like good Star Wars movies, even in down years of toy sales, and especially if the current push is what Disney has in store for the Star Wars brand going forward.

But I think the GB East crew eventually got to the real point of the acquisition being mobile and userbase info and access.

According to Twitters website they have 320m active users. Nothing iffy about it.