THE SCHEME DOCUMENT
Today, Activision revealed that it has agreed to purchase Candy Crush developer King for $5.9 billion — that’s one Oculus Rift plus one Minecraft with a cool $1.4 bil’ left over for Grandma. Between this and Call of Duty, the purchase would give Activision almost complete dominance over the casual games market. Only Madden and FIFA stand in its way.
According to Bloomberg, Activision will be paying $18 a share, compared to the current market price of $15.54. The company would essentially be paying 20% more than King is worth.
There’s a lot to pick over in the Business Wire release, which is to be expected from a deal like this. The purchase will be made in cash, with $3.6 billion coming from Activision’s offshore holdings and $2.3 billion coming from an “incremental term” loan courtesy of Bank of America & Goldman Sachs. Got all that so far?
Here’s my favorite part.
It is intended that the Acquisition will be implemented by means of a scheme of arrangement under Chapter 1 of Part 9 of the Irish Companies Act 2014 (the “Scheme”). It is intended that the scheme document, (the “Scheme Document”) containing the full terms and conditions of the Acquisition (including notices of the shareholder and scheme meetings), will be issued to King’s shareholders, and, for information only, to holders of King’s options and share awards, within 28 days of this Announcement.
That’s all fairly boiler-plate stuff — King finds this agreement fair, and shareholders will be informed of the full deal within about a month. But holy shit — the “Scheme Document.” I know there’s a legal reason the release is using the word “scheme,” but I can’t get the image of Bobby Kotick and his ragtag group of con men planning a caper to rouse the funds for this purchase.
The release also lets slip that the deal is not actually completely set. King’s shareholders still need to agree to this purchase. “In order to become effective, the Scheme must be approved by a majority in number of the King’s shareholders voting at the scheme meeting, either in person or by proxy, representing at least 75% in value of the King shares voted in each relevant share class.”
There might be a chance they won’t agree — King’s games still make a lot of money — but finance people like to get out while they can. And even if King’s shareholders agree to the purchase, the acquisition must still be legalized by the Irish High Court. There’s a lot to worry about when billions are involved.
Activision and King will be holding a conference call on Nov 3 at 8:00 AM regarding this story, followed by an individual earnings call from King on Nov 4. Expect to hear more about this deal (and Activision’s upcoming Black Ops III) there.