Casual-gaming giant King Digital Entertainment disclosed during its earnings report today that it bought Seattle game studio Z2 in a deal that could be worth up to $150 million.
London-based King is known mostly for its “Candy Crush” franchise. It reported strong earnings today, with sales up 20 percent and a special 94 cent dividend, that led to an 18 percent jump in its share price in after-hours trading.
Five-year-old Z2 makes freemium online action and strategy games – which are free but encourage paid upgrades – such as “Battle Nations” and “MetalStorm.” Several of its games have been top-grossing titles on the iOS platform.
King is paying $45 million in cash and up to $105 million more over the next three years, depending on the performance of Z2 games.
Z2 – formerly known as Z2Live – raised $6.5 million from Madrona Venture Group and Draper Fisher Jurvetson, according to CrunchBase.
The company was formed to develop an Xbox Live-style gaming community on iOS but changed direction and began focusing on fremium, multiplayer online games in 2010. It rebranded as Z2 and shuffled its leadership in 2012, at which time it employed 150 in Seattle and Vancouver, B.C.
The deal gives King its first U.S. studio. Here’s the disclosure in King’s earnings report:
On February 6, 2015, the Company signed an agreement, to acquire Z2Live, Inc. (“Z2“), a game development company based in Seattle, Washington. Total consideration for the acquisition consists of $45 million in cash, and up to $105 million of additional cash linked to future events including revenues generated by certain games launched by Z2 over a specific period, to be paid annually over a three-year period following the acquisition date.
Through this acquisition, the Company will incorporate a proven team focused on contributing to our diversification into new genres. Z2 will be our first game studio in the United States.
This acquisition is subject to the satisfaction or waiver of customary conditions, including regulatory approval in the United States, and is expected to be completed no later than the end of first quarter 2015.