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King files for $500m IPO on NYSE

King files for $500m IPO on NYSE

Tue 18 Feb 2014 1:07pm GMT / 8:07am EST / 5:07am PST
FinancialPublisher

Publisher dangles the Candy Crush carrot for investors

Candy Crush Saga publisher King has filed for an IPO on the New York Stock Exchange in a deal lead by Merill Lynch, J.P. Morgan and Credit Suisse. The publisher intends to trade under the ticker "KING".

OPtions to buy will only be made available via a prospectus available from those firms, an official release has explained.

The official maximum offering, as included in the F-1 form filing, is $500m.

The news ends months of speculation on when the company would decide to capitalise on its $1.9 billion trading year, revenues which generated a net income of $568 million. Investors may still prove to be wary, however. With King's fortunes currently resting almost exclusively on the performance of Candy Crush, there's a fragility to its bottom line. With a number of high-profile bubbles having burst in the industry over the last year or two, particularly in the social and casual sectors, a little caution wouldn't be too surprising.

King has also suffered a few PR setbacks recently. In what was likely part of a process of galvanising before the announcement, King recently secured a number of trademarks relating to its games, reserving rights for both 'Candy' and Saga.

Those filings, and the resistance of the developers affected, have generated a lot of negative headlines for King in recent weeks, including an embarrassing public climb down after facing accusations of cloning. Whether that bad press filters down to the desks of investors, or indeed the minds of customers, remains to be seen.

13 Comments

Christopher Bowen Editor in Chief, Gaming Bus

461 754 1.6
Popular Comment
Speaking purely from an investment standpoint, I would run screaming from this and not look back. The article - good job on this, Dan -does a great job of explaining the problems with investing in someone who has actually *less* of a reliable catalogue than Zynga did, and look where Zynga's stock went. Once that Candy Crush bubble bursts, especially in such a hit-driven industry, that's going to cause a run on the stock.

Investors could not care less about the negative PR because said negative PR only exists in the heads of industry folks, and let's face it: the people playing Candy Crush Saga aren't reading our sites. That's a non-issue as far as I'm concerned.

Posted:10 months ago

#1

Tom Keresztes Programmer

700 354 0.5
Sweeeeet candy!

Posted:10 months ago

#2

Helen Merete Simm Senior UI Artist, Codemasters

53 276 5.2
Although I suppose there is an endless source of games for them to clone, at the moment theyre still mainly riding on the high of one cloned game. And they have been for a while.
For those reasons I wouldn't invest.

And for moral reasons I'd rather spend my money funding new IP on Kickstarter.
(I realise I won't make any money thinking like that though)

Posted:10 months ago

#3

Kevin Ezeadiugwu Associate Product Manager, [x+1]

7 7 1.0
Anyone who buys this at the IPO price is literally insane or delusional. King.com is a great company but the writing is on the wall, this IPO will screw investors who buy into it.

Posted:10 months ago

#4

Nicholas Lovell Founder, Gamesbrief

211 254 1.2
Which game is cloned? I know about Candy Swipe (that is the look and feel, not the mechanics). I know about Bejewelled Blitz (anyone who thinks this is a clone doesn't understand the value of the Saga-style retention game). I know about all match-3 games, but none of those have made anything this level of success.

So which ones am I missing?

And @Kevin, we don't know what the IPO price is yet. Or do you believe that anyone investing in King is insane or delusional, irrespective of the price.

Posted:10 months ago

#5

Nicholas Lovell Founder, Gamesbrief

211 254 1.2
BTW, I am concerned about the prospects of any company that has 78% of its revenue from a single game and that has seen profits grow from $8m to $568m in a year, but that does not mean that King hasn't done something really rather impressive with CCS.

Posted:10 months ago

#6

Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster

473 187 0.4
Popular Comment
Nicholas, the same game with different retention mechanics is still the same game, and the term 'Clone' refers mainly to the game itself, not the business stratagems around it.

Making a Tetris clone ask me to share over Facebook in between each difficulty level does not change the fact I'm playing Tetris, although it may lower my enjoyment for it.

Edited 1 times. Last edit by Andrew Ihegbu on 18th February 2014 6:19pm

Posted:10 months ago

#7

Kevin Ezeadiugwu Associate Product Manager, [x+1]

7 7 1.0
@Nicholas I do mean anyone investing in the King.com IPO is insane or delusional. My estimation of the IPO valuation will peg it at $5 - $8 billion. King.com is a great operator of games but they got lucky with Candy Crush. Also, their so called massive 'back-catalog' of games are literally just recycled variations of match three games. Can king.com innovate and once again seize the market with another hit-game in a fresh game category? I highly doubt it. Based on the games they have been making, I don't think they have the talent or culture (most important) to pull it off.

I believe after the IPO, the stock price will tank when the Candy crush user exodus is revealed and then king.com will use their cash to acquire talented studios and transition to more of a publisher role.

Posted:10 months ago

#8

Paul Jace Merchandiser

955 1,449 1.5
@Nicholas
Which game is cloned?
I think they were referring to this one:

http://www.gamesindustry.biz/articles/2014-01-23-king-copied-our-game-says-indie-dev

Posted:10 months ago

#9

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

961 1,759 1.8
I am an utter n00b when it comes to big business and high finance. So can someone give me a one paragraph description of why a company with millions if not billions in the bank would prefer to lose control of their destiny just to get a bit more?

What exactly is this new investment meant to finance that their own reserves can't? Surely it's not about more Ferraris for the principals, how many do they need?

Edited 1 times. Last edit by Paul Johnson on 19th February 2014 8:59am

Posted:10 months ago

#10
@Paul
If you look at their cap table, the management are small minority shareholders even before the IPO so you could argue that their destiny has been in the hands of external investors (Apax and Index who together own over 50%) for some time now.

There are lots of good reasons for listing (and lots of risks too): giving employees with shares/options easier sale opportunities, giving the company a strong additional currency (i.e. listed shares) for acquisitions and making future fund raisings much easier.

As for why they are raising more money, again there are several reasons although it is mainly because they can!. Other reasons are to bloster the war chest for future acquisitions and to provide some share liquidity in the market once the listing goes live.

Posted:10 months ago

#11

Paul Johnson Managing Director / Lead code monkey, Rubicon Development

961 1,759 1.8
Right, thanks - that makes some sense. I was under the impression they were a fully private enterprise.

Posted:10 months ago

#12

Neil Young Programmer, Rebellion Developments

312 412 1.3
Didn't they recently say they were delaying this to prove they could repeat CCS's success first? Or am I confusing them with someone else?

Posted:10 months ago

#13

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