Apax-backed King bolts on Nonstop, pays out special dividend

Ellie Pullen
13 August 2014

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King Digital Entertainment, the Nasdaq-listed maker of Candy Crush Saga backed by Apax Partners, has acquired VC-backed Singaporean games developer Nonstop Games for $90m and handed out a $150m special dividend.

King has acquired Nonstop, which has received funding from Creandum and Lifeline Ventures, for a $6m upfront cash payment and a consideration of a further $84m based on specific criteria regarding revenues from games developed. Nonstop will remain headquartered in Singapore following the acquisition.

King has also announced a special $150m dividend, equivalent to around 47 cents per share and payable to shareholders as of 30 September 2014. Apax's holding company, Bellaria Holding, and the company's executive officers, directors, founders and other affiliated funds have agreed to a new lock-up period until King announces its 2014 full-year earnings. These shareholders collectively hold 80% of King's outstanding shares.

King announced its intention to float in February this year. Its initial IPO price of $22.5 per share gave the company a market cap of $7bn.

Both announcements were made as part of King's Q2 earnings report, which shows that the business generated $593.5m in revenues in Q2 and a total of $1.2bn in H1. Adjusted EBITDA for Q2 reached $248.2m with a margin of 42%.

The fact that King generated $30m less in revenues in Q2 compared with Q1 seems to have been the cause of a sharp plummet in share price following the release of the earnings report, with shares falling to $17.8 apiece yesterday afternoon (12 August).

However, this is by no means the lowest price that shares in the games developer have reached. Shares hit their lowest in the late spring, closing on just $15.3 each on 13 May.

King set the price of shares in its March IPO at $22.5 apiece, though this dropped by 15% in its first day of trading and has only once risen anywhere close to the initial price at the beginning of July, which saw stock trading at $22.5 per share at market close on 2 July.

Since this spike, King shares have once again been steadily declining with a few brief jumps in price along the way.