‘Candy Crush’ deal: Activision King Digital

Published: November 3, 2015

‘Candy Crush’ deal: Activision King Digital, It’s not often that the debt of an acquirer gets upgraded on the heels of a merger announcement that is partially funded with debt.

But that’s the good fortune Activision-Blizzard (ATVI), which announced Tuesday it’s buying King Digital Entertainment (KING) for $5.9 billion in cash and debt.

Moody’s Investors Service upgraded Activision’s senior unsecured notes rating to Baa3 from Ba2 (a two notch jump on the ratings scale) and its senior secured credit facilities to Baa2 from Baa3. The bonds are rated at a lower level of investment grade. Analysts write:

We do not expect the transaction to have a material effect on Activision Blizzard’s credit metrics as approximately 60% of the acquisition will be funded with cash on hand and we anticipate that the company will reduce debt quickly over the next two years. The outlook is stable.

Activision shares were headed slightly lower in pre-market trading. They closed Monday at $34.57. King Digital’s stock looked set to open 15% higher at around $17.85, up from Monday’s close at $15.54.

Moody’s writes of Activision:

The upgrade reflects Activision Blizzard’s leading position in the growing and fragmented gaming industry, strong diversification across multiple genres and gaming platforms, and strong track record of developing profitable and sustainable franchises with international appeal.


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