King Digital Entertainment, the British creator of the hit smartphone game Candy Crush Saga, has been bought for $5.9bn (£3.8bn) in a deal that will mean a payday of more than $1.2bn for co-founders Mel Morris and Riccardo Zacconi.
King is being acquired by Activision Blizzard, the US video game maker behind World of Warcraft and Call of Duty. The US group will pay $18 in cash for each King share – 16% more than the UK company’s closing price on Monday – in the biggest takeover in the British tech sector since Hewlett-Packard bought Autonomy in an ill-fated £7bn deal in August 2011.
Morris, the former chairman who left the company last year and is now owner of Derby County FC, has an 11.3% stake in King worth $666m at the $18 price. Zacconi, the chief executive, stands to bank $561m, and will stay on at the company. The deal will also make cash multimillionaires of other top executives.
Activision Blizzard’s games are played on consoles – Microsoft’s Xbox and Sony’s PlayStation – and it said buying King would give it a place in the rapidly growing mobile games market.
It added that 60 % of King’s players were female, and that the combined company would have more than 500 million monthly active users across the world.
King floated on the New York Stock Exchange in March last year with a valuation of almost $8bn, making it the most valuable British business of the tech craze. Candy Crush had become wildly popular, racking up a billion plays a day on smartphones for the company, based in London’s West End.
But the confectionery-themed game, in which players must make lines of sweets disappear from a grid by lining up three or more of the same colour, was no longer a top 10 download at the time of flotation. King’s shares fell on their first day of trading as traders decided it was a one-product company, even though the business has 200 games.
The game still makes up about a third of King’s revenues and the shares have never got back to the $22.50 they were sold for. The sale to Activision Blizzard means those who bought at the time of flotation have made a loss.
The flotation made multimillionaires on paper of the company’s leadership team, including Morris, but their fortunes were tied up in shares. The British entrepreneur used his wealth to become the sole owner of Derby County, his local football club, in September after selling almost 2% of King.
At the time of the flotation, Morris’s stake had a paper value of about $875m. Chief operating officer Stephane Kurgan and chief creative officer Sebastian Knutsson will receive $150m and $309m respectively.
Zacconi and his team will run King as a separate business within Activision Blizzard. He said: “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.”
Sweet returns
The takeover is the second time Morris, 59, has made millions from the sale of a technology business. The self-made tycoon left school at 16 and by 20 he was working as a management consultant. After a spell in the US, Morris, moved back to his home town of Derby.
Already a serial entrepreneur with a hardwood flooring company and a Spanish property business, in 1998 he turned his matchmaking agency into an internet dating site, uDate, the sale of which netted him £20m four years later.
Morris spent some of that money on a stake in Derby County, later sold, and part of it on establishing King Digital. He was persuaded to invest by Zacconi, who had worked at uDate. Toby Rowland, the son of the Lonrho tycoon Tiny Rowland, who helped run the dating site, also put money into King.
Now Morris has bought all of Derby County. He acquired 22% of his boyhood club in May last year after the Championship play-off defeat to Queens Park Rangers.
Morris, worth £400m according to the Sunday Times Rich List, stood down as chairman of King after its flotation but kept a stake of about 12%, most of which he has kept.
Zacconi is an Italian former management consultant who joined the digital industry during the dotcom boom of the late 90s. He missed out on a potential fortune when Spray, the Swedish web portal he worked at, delayed its flotation and the dotcom bubble burst. At the sale price of $18 a share for King, his stake is worth $561m.
Knutsson cofounded Spray, where he met Zacconi. He claims to have designed most of King’s worst games but he struck gold when Candy Crush emerged from his Stockholm studio. He banks $309m at the announced sale price.
Kurgan, who is Belgian and has an MBA from France’s elite Insead, joined King from Tideway, a data-centre management business. His stake is worth approximately $150m.
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