Mobile game maker King Digital Entertainment Plc priced its initial public offering on Tuesday at the mid-point of its expected range, valuing the “Candy Crush Saga” maker at about $7.1 billion despite questions about whether it can replicate the success of its smartphone smash-hit.<\/p>\n
The offering marks the largest United States IPO from a booming mobile gaming industry that has been keen to emerge from the shadow of Zynga Inc, the social gaming firm that lost half its value after a 2011 IPO that valued it just below King at $7 billion.<\/p>\n
London-based King priced its IPO at $22.50 per share, with the stock to debut on the New York Stock Exchange on Wednesday. Its offering of 22.2 million shares would raise about $500 million at that price.<\/p>\n
“It’s fair to say that if it was a very high-demand IPO, we would’ve seen the price at the upper end of the range,” Sterne Agee analyst Arvind Bhatia said. “At the mid-point, it’s a successful IPO but perhaps not a runaway success.”<\/p>\n
Even if King, whose other games include “Bubble Witch Saga” and “Papa Pear Saga”, pulls off a strong debut, the real test will be the stock’s staying power in coming weeks and months. King hopes to avoid Zynga’s fate by virtue of a stronger focus on a mobile gaming market worth an estimated $17 billion.<\/p>\n
“What’s more important than the price is how it trades tomorrow and in coming sessions,” Bhatia said. “If the investors are in because they expect a quick profit and it doesn’t happen because it doesn’t get a lift, people will exit quickly.”<\/p>\n
Founded in Sweden in 2003, the company has drawn plaudits for transforming “Candy Crush Saga” into a household name that was the most downloaded and top-grossing free app of 2013 on Apple Inc’s app store.<\/p>\n
King, formerly known as “King.com”, was saved from bankruptcy only by a last-minute infusion of investor capital on Christmas Eve in 2003 and survived to eventually turn a profit in 2005 and every year since.<\/p>\n
But it relies on its marquee game for over three-quarters of its revenue – a red flag for investors. They warn of the dangers of an industry where games like “Draw Something”, a one-time hit from Zynga’s OMGPop studio that was shut down a year ago, can top the charts and then quickly fizzle.<\/p>\n
The stock’s debut on the Big Board on Wednesday, under the ticker “KING”, will be closely watched by youthful rivals like San Francisco-based Kabam and Kixeye – known for strategy games like “Kingdoms of Camelot” and “War Commander” – which are expected to seek market listings or new financing.<\/p>\n
King sold 15.5 million shares in the offering. The rest is being offered by selling stockholders, including Apax Ventures.<\/p>\n
Apax is the company’s largest shareholder and will retain a 44.2 percent stake in the company, if underwriters fully exercise their option to buy shares.<\/p>\n
Riccardo Zacconi, who has led King since co-founding the company, will hold a 9.5 percent stake in King after the IPO.<\/p>\n
JP Morgan, Credit Suisse and BofA Merrill Lynch acted as lead underwriters for the offering.<\/p>\n
Candy Crush maker faces IPO scrutiny<\/a><\/strong><\/p>\n Tencent bets on mobile gaming for WeChat boost<\/a><\/strong><\/p>\nCandy Crush maker valued at $7.6 billion?<\/a><\/strong><\/h3>\n