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Was Apax Partners behind King Digital Acquisition?

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Nov. 17 2015, Updated 8:06 a.m. ET

Apax Partners is likely the force behind King Digital’s acquisition

Previously in the series, we discussed Activision Blizzard’s (ATVI) announcement that it plans to acquire Candy Crush creator, King Digital, for $5.9 billion. We also discussed King Digital’s dependence on Candy Crush, which is pressuring the company to broaden its portfolio. After looking at King Digital’s history so far, it is highly likely that Apax Partners, a PE firm, was the main force behind this pressure. Apax Partners is a single investor in King Digital that owned ~44% after the company’s IPO.

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Shareholder activism is increasingly playing a dominant role in the acquisition or split of companies

Recently, there has been increasing pressure on companies to consider various options to unlock “shareholder potential.” Technology firms like eBay (EBAY), Hewlett-Packard (HPQ), and Symantec (SYMC) have all succumbed to pressure to split their companies.

Elliott Management, an activist investment firm, took a $1 billion stake worth ~2% in EMC in 2014 with the likely intention to urge EMC to spin off its 80% share in VMware. The firm played a significant role in EMC’s acceptance of Dell’s acquisition proposal of $67 billion. EMC even considered buyout by its own subsidiary, VMware (VMW), before accepting Dell’s proposal.

Apart from being the largest acquisition deal in the technology sector to date, this news holds special importance because according to the Wall Street Journal, EMC’s $67 billion proposed acquisition by Dell was an equally big deal in the shareholder activism space.

You can consider the PowerShares QQQ Trust (QQQ) to gain exposure to the tech sector. The ETF invests about 54% of its holdings in the technology sector.

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