Offshore cash to fund acquisition
As we stated in Part 1, ABS Partners, a wholly owned subsidiary of ATVI, will acquire the outstanding shares of King Digital (KING) for $18 in cash per share. Activision Blizzard (ATVI) has stated that the cash consideration payable under the terms of the acquisition “will be funded from from approximately US$3.6 billion of offshore cash on the balance sheet of the Activision Blizzard Group and by an incremental term loan committed by Bank of America Merrill Lynch (BAC) and Goldman Sachs Bank USA (GS), as incremental lenders, under Activision Blizzard’s existing credit agreement in the amount of US$2.3 billion.”
The combined firm is expected to maintain a strong balance sheet with conservative debt levels. The Activision-King acquisition is expected to close by spring 2016.
King Digital will operate as an independent operating unit of Activision with minimal integration risk, and the firm will continue to be led by CEO Riccardo Zacconi, CCO Sebastian Knutsson, and COO Stephane Kurgan, with long-term contractual commitments.
Bobby Kotick, chief executive officer of Activision Blizzard, said “Riccardo, Sebastian, and Stephane are some of the best minds in the business, and we have long-admired King for consistently creating incredibly fun, deeply engaging free-to-play games that capture the imaginations of players across ages and demographics. Activision Blizzard will provide King with experience, support and investment to continue to build on their tremendous legacy and reach new potential. We share an unwavering commitment to attracting and developing the best talent in the business, and we are excited about what we will be able to accomplish together.”