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Thousands Of Shorts Royally Crushed After Activision Acquires King Digital
Call it an example of an abbreviated public lifecycle. After IPOing at $22.50 just last March and then promptly tumbling, Candy Crush maker King Digital was stuck in no man's land: demand for its products was promptly waning and the organic growth its underwriters had promised was nowhere to be found. The fundamentally savvy hedge funds sniffed this out and promptly jumped on board what seemed like a royal flush slam dunk to zero.
And then, overnight, out of nowhere Activision decided to crush the Candy Crush shorts, who had built up a short stake amounting to 25% of the float, when it announced it would acquire the company for $5.9 billion or $18/share, a 16% premium to the previous day closing price... and also a 20% discount to the IPO price.
From Reuters:
Video game maker Activision Blizzard Inc (ATVI.O) said it will buy "Candy Crush Saga" creator King Digital Entertainment (KING.N) for $5.9 billion to strengthen its mobile games portfolio.ABS Partners CV, a unit of Activision Blizzard, will acquire King shares for $18 each in cash, representing a premium of 16 percent to King's closing price on Monday.
The addition of King's mobile games will position Activision as a global leader in interactive entertainment across mobile, console and PC platforms, Activision said in a statement. Video game publishers are shifting to the lucrative digital business from physical sales of games as consumers shift from consoles to playing on smartphones and tablets.
The fast-growing mobile gaming segment is expected to generate more than $36 billion in revenue by the end of 2015, according to Activision.
Activision Blizzard Chief Executive Bobby Kotick told Reuters that buying King will help broaden the reach of its games and expand into new demographics, adding that 60 percent of King's players are female and that no gaming consoles or hardware, besides a phone, is needed to play King's games.
"You have such broad reach. This is a fantastic opportunity for us to create compelling content for new demographics," Kotick said.
Activision, which owns popular game franchises such as "World of Warcraft," "Call of Duty," and "Diablo," said the deal gives the combined company more than 500 million monthly active users across the world and would add to Activision's estimated 2016 adjusted revenue and earnings by about 30 percent.
Dublin, Ireland-based King will continue to operate as an independent operating unit led by Chief Executive Riccardo Zacconi. Zacconi told Reuters that Activision appealed to him because of the company's expertise in building long-lasting franchises.
King, which went public last March, has been struggling to boost bookings - an indicator of future revenue. The deal, expected to be completed by spring 2016, is subject to approval by King's shareholders and the Irish High Court, and clearances by antitrust authorities.
Activision said it will use $3.6 billion of offshore cash and borrow the rest from Bank of America Merrill Lynch and Goldman Sachs Bank as incremental lenders.
And just like that both those who held on to KING shares since the IPO, as well as thousands of shorts have managed to lose money thanks to a deal that could only happen thanks to the Fed's loose monetary policy and non-existent benchmark rates of return, which makes even a stupid deal such as this one accretive courtesy of virtually zero-cost debt.
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Shorts have been getting crushed since the last financial crisis due to Fed levitating the stock market. It's a wonder any shorts are left.
And the same thing is happening to gold and silver longs.
Forward - to fake, manipulated markets.
In other news:
Explosion INSIDE cabin brought down Russian passenger jet over Egypt US infrared pic showshttp://www.express.co.uk/news/world/616032/ISIS-Russian-jet-Egypt-Terror...
I thought we all agreed not to use the M word.
There's no M in CIA.
I'm just waiting for Protovision to acquire Activision.
" Infidels! "
Its nothing like the VW short squeeze back in 2008 - it was the most valuable company in the world briefly.
Perception and reality are two completely different things, defectively designed and prone to the expensive PARTnership, if you didn't do the repairs yourself, it was just as costly as an American clunker.
Did the execs at King get paid when they IPO'ed? Yes. Did they get paid a second time when they sold to Activision? Yes. Well, that's all that matters. Shareholders can go fuck themselves, I guess. Thanks for the money, now get out.
Get out now or there's going to be hell to pay.
Ahh now we have auto play audio files?
There goes headline surfing on my phone over morning coffee.
First WRAL, and now ZH?
Get Adguard, for USD 19,95/year you can run both an adblocker on your PC *and* one on an Android phone. Works exceptionally well ;)
It was as if a million voices cried out and were suddenly silenced
a deal that could only happen thanks to the Fed's loose monetary policy and non-existent benchmark rates of return, which makes even a stupid deal such as this one accretive courtesy of virtually zero-cost debt
That's a beautifully constructed, wonderfully concise description. It could be applied to most deals these days.
Ahhhh, I remember the days of valid accounting rules.....
Price discovery, now, is what you want it to be....
The main market driver is propaganda.
If you know anyone who, for example, supports the troops – they are weak minded and are easily susceptible to propaganda.
Paid patriotism is everywhere.
This makes me want to go home and play Diablo 3 tonight. Been neglecting my seismic slam barb for a while.
I wonder if someone had a moment of clarity during the acquisition process, put down his coke spoon and said "Dude, this is almost 6 Billion for a fucking GAME". Nahhhhhh......
How are mobile games supposed to bring in $36 billion?
Oh I forgot, advertising revenue and selling personal info gathered off phones and tablets.
Download a game and check the app permissions sometime. It reads like the worst spyware you could ever infect your comouter with. Read contact lists, phone history, browsing history, download history, utilize services that cost you money, post directly to Facebook, read Facebook posts, etc.
Stupid women don't even know or care to check app permissions. I wish I could fire half the women in my office for playing mobile games at work. We blocked Facebook because half the customer service girls did nothing but post on Facebook all day and now they play games on their phones under the desk.
King was never supposed to make money off the game. They were supposed to make a fortune off selling off your private life.
By the way, why were they based in Dublin? Couldn't have anything to do with a tax shelter, nah.
There's in game purchase revenue -- for example, in King's Candy Crush, as I understand it, once you run out of lives, you can buy more to continue playing.
Machine Zone known for its mobile game Game of War, generates $1.5 million per day on in game purchases. How else could they afford to take out ads on the Superbowl starring Kate Upton and Maria Carey? They probably make money selling data but I suspect it is a small fraction of their total income.
Wait.. You still have a customer service department? You can outsource it all to one Indian with a terrible accent, or just have a web page FAQ with no contact info. If anyone calls your sales dept with questions just put them on hold indefinitely.
In the meantime encourage your female workers to play games all day and hand out company branded vibrators to use while playing... Now spin off their department as a sex cam premium support line to upscale your customers on value added services
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So you only have to check this fake, made up markets, once a day to take back what's ours.
Check for free: http://tripstrading.com/tradealertsp500/
This is just stupid....billions for a stupid game.....
Wait, isn't the stockmarket a stupid game? A game with only one winner?
People who play Candy Crush instead of preparing for the storm ahead deserve to be crushed themselves. My fellow countrymen are so stupid I can't see straight sometimes.
Cheer up and take a trip out into the countryside. You'll see plenty of evidence that non-urban Americans are not so stupid as their metrosexual cousins. Frankly, I want the college graduates, democrats, socialists, and general scum-suckers to be playing Candy Crush right up to the moment when Bigfoot kicks in their door. Any action they might support to prepare the country for the crisis would only make things worse. Whatever dazed survivors make it out of the burning cities will be delighted to be agricultural slaves laboring in the fields of their new masters. Or if not exactly delighted, at least they will be disarmed and deprived of the leadership tool that binds them together, and thus unable to protest their new job title.
Months as the King or Queen of Candy Crush followed by years of service as human lawn jockeys. There is a God after all.
But we will still be allowed to play Candy Crush on our breaks in the field, right?
Who wants to bet that Goldman lent the King shares to its clients to sell short, while also working on thie deal?
When the big boys are the counterparties on the hook for paying off the shorts, it can be solved by "finding" an agent to buy the stock at an inflated price for them.
Wait... so they just spent basically the profit from all the Call of Duty games EVER sold just to buy the fad known as Candy Crush at the top of this biggest bubble in history?
Wow. Great job Yellanke. Free money never finds a stupid purchase...or is that the other way around.
Coming soon. Call of Duty: Candy Crush Edition
Glass-Steagall