Activision Blizzard, Inc. (Nasdaq:ATVI) agreed to acquire King Digital Entertainment plc (NYSE: KING) for $5.9 billion. Under the terms of the deal, Activision’s unit ABS Partners CV will acquire King for $18 in cash per share, representing a 20% premium over King’s closing price on October 30, 2015.

The addition of King’s highly-complementary business will position Activision as a global leader in mobile gaming—the largest and fastest-growing area of interactive entertainment, that is expected to generate over $36 billion of revenue by the end of 2015 and grow cumulatively by over 50% from 2015 to 2019, according to Activision.

The combined company will have a world-class interactive entertainment portfolio of top-performing franchises, including two of the top five highest-grossing mobile games in the U.S. (Candy Crush Saga, Candy Crush Soda Saga), the world’s most successful console game franchise (Call of Duty), and the world’s most successful personal computing franchise (World of Warcraft), as well as such well known franchises as Blizzard Entertainment’s Hearthstone: Heroes of Warcraft, StarCraft, and Diablo and Activision Publishing’s Guitar Hero, Skylanders and Destiny, along with over 1,000 game titles in its library.

Bobby Kotick, CEO of Activision Blizzard, said, “The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment. With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before.”

Riccardo Zacconi, CEO of King, said, “We are excited to be entering into this Acquisition with Activision Blizzard. Since 2003, we have built one of the largest player networks on mobile and Facebook, with 474 million monthly active users in the third quarter 2015, and our talented team has created some of the most successful mobile game franchises. We believe that the Acquisition will position us very well for the next phase of our company’s evolution and will bring clear benefits to our players and employees. 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. We are very much looking forward to working with Activision Blizzard. We have two teams that, together, will have an amazing footprint, innovative technology, and leadership across platforms, and unique, established IPs to delight one of the largest networks of players in the world.”

Gerhard Florin, Chairman of King’s board of directors, said, “The Acquisition provides a return to King shareholders through the premium that it provides to King’s share price and the immediate liquidity that the Acquisition will provide to all of our shareholders upon completion. The King board of directors believes that Activision Blizzard’s cash offer is attractive given the balance of future opportunities, risks and competitive forces confronting King’s business.”

This leading content, together with expertise across subscription, upfront purchase, free-to-play and micro-transaction business models will enhance Activision’s position as one of the world’s most successful interactive entertainment companies.

During the last twelve months ended September 30, 2015, Activision had non-GAAP revenues of $4.7 billion and King had adjusted revenues of $2.1 billion. During the same period Activision had adjusted EBITDA of $1.6B and King had adjusted EBITDA of $0.9 billion. Activision had GAAP revenues of $4.9 billion and King had IFRS revenues of $2.1 billion. Activision had GAAP net income of $1.1 billion, and King had IFRS profit of $0.6 billion.

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.

Activision also reported third-quarter earnings of 17 cents per share, compared with a loss of 3 cents a year earlier. Excluding items, it earned 21 cents per share. Revenue rose 31% to $990 million.

The boards of directors of both companies unanimously approved the transaction, which is being implemented by means of a scheme of arrangement under Irish law. The acquisition is subject to customary closing conditions, and is expected to be completed by Spring 2016.

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