King.com, maker of the popular “Candy Crush Saga” puzzle game on Facebook Inc. and Apple (AAPL:US) Inc. products, made a confidential filing for an initial public offering, a person familiar with the matter said.
The company, part of Midasplayer.com Ltd., according to its website, hasn’t set a date for the sale, said the person, who asked not to be named because the plans are private. Alex Dale, a spokesman for London-based King, didn’t respond to a request for comment. The company was founded in 2003.
An IPO could value the business at $5 billion to $7 billion, said Michael Pachter, an analyst with Wedbush Securities in Los Angeles, who based his estimate on sales figures from company executives. In June, King passed Zynga (ZNGA:US) Inc., the social games company that went public in December 2011, as the top game supplier on Facebook.
“A $5 billion valuation is perfectly reasonable,” Pachter said. “They aren’t a one-hit wonder, they’re a four-hit wonder and if the numbers show that’s sustainable, they’ll get more than the $5 billion.”
Sales this year will top $1 billion, up from about $500 million in 2012, according to Pachter. The Telegraph of the U.K. reported on King’s IPO filing on Sept. 26.
Under the Jumpstart Our Business Startups, or JOBS, Act, companies with less than $1 billion in annual revenue may keep filings confidential until shortly before marketing their offerings. Twitter Inc., based in San Francisco, is also using the confidential process.
King.com, which has offices in San Francisco and Stockholm, holds the top two spots among monthly active users on Facebook with “Candy Crush Saga” and “Pet Rescue Saga,” according to the website AppData, which tracks usage. It’s among the top downloads on Apple’s iOS devices and products using Google Inc.’s Android software.
King.com makes money selling items to help players complete levels. It hired JPMorgan Chase & Co. (JPM:US), Credit Suisse Group AG and Bank of America Corp. (BAC:US) to prepare for the offering, people familiar with the matter said in June.
Revenue at San Francisco-based Zynga is forecast to shrink to $872.3 million this year from the 2012 peak of almost $1.3 billion, according to data compiled by Bloomberg.
Chief Executive Officer Don Mattrick, who replaced Zynga founder Mark Pincus as CEO in July, is shaking up management to improve game development after five years as the top supplier of games to Facebook.
Zynga, which first sold shares for $10 each, fell 0.5 percent to $3.82 at the close in New York. The stock has rebounded 62 percent this year and has a market value of $3.03 billion, according to data compiled by Bloomberg.
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