Microsoft To Buy Minecraft Maker Mojang For $2.5 Bln

(RTTNews) - Software giant Microsoft Corp. (MSFT) said Monday that it has agreed to acquire Swedish videogame maker Mojang AB for $2.5 billion.

The acquisition of Mojang, maker of the popular 'Minecraft' videogame, is the first multi-billion dollar acquisition by Microsoft after new CEO Satya Nadella took charge in February 2014.

The Wall Street Journal reported last Tuesday that Microsoft was close to striking a deal to acquire Mojang for more than $2 billion.

Redmond, Washington-based Microsoft, the world's largest software maker, noted that the Mojang team will join Microsoft studios, which includes the studios behind franchises "Halo," "Forza," and "Fable."

'Minecraft' is available across platforms and can be played on Microsoft Xbox as well as Apple Inc.'s (AAPL) Mac, Sony Corp.'s (SNE) PlayStation, PCs and smartphones. 'Minecraft' is the most popular online game on Xbox, and the top paid app for iOS and Android in the U.S.

Microsoft plans to continue to make 'Minecraft' available across all the platforms on which it is currently available - PC, iOS, Android, Xbox and PlayStation.

Satya Nadella, CEO of Microsoft, said, "Gaming is a top activity spanning devices, from PCs and consoles to tablets and mobile, with billions of hours spent each year. Minecraft is more than a great game franchise - it is an open world platform, driven by a vibrant community we care deeply about, and rich with new opportunities for that community and for Microsoft."

Carl Manneh, CEO of Mojang said, "The acquisition by Microsoft brings a new chapter to the incredible story of 'Minecraft. As the founders move on to start new projects, we believe the high level of creativity from the community will continue the game's success far into the future."

Stockholm-based Mojang has sold nearly 54 million copies of 'Minecraft', which is a Lego-style video game where players build blocky structures. It was officially released in 2011 after a two-year beta period.

'Minecraft' is Mojang's major release to date, though it has smaller games such as 'Catacomb Snatch' and 'Battle Frogs.' The company is currently in the process of developing a tactical role-playing game called 'Scrolls.' The games are expected to give a big boost to Microsoft's Xbox.

The proposed acquisition of Mojang is expected to give Microsoft access to a set of new generation customers, a market segment it has been unable to tap until now.

Microsoft noted that 'Minecraft' is one of the most popular video games in history, with more than 100 million downloads, on PC alone, by players since its launch in 2009. The company added that the 'Minecraft' community is among the most active and passionate in the industry, with more than 2 billion hours played on Xbox 360 alone in the past two years.

Mojang has made a profit of 816 Swedish kroner, or $115 million, last year on annual revenues of 2.07 billion kroner or $291 million, one-third of which is attributed to 'Minecraft' sales. It works thin with only just under 30 employees.

Mojang generates sales from outright sales of games as well as from licensing deals with Lego and Warner Bros. Pictures as well as Scholastic Corp. (SCHL). Mojang charges a flat fee for its games. The Xbox version costs $20, while a download on a PC is $27 and the mobile version is $7.

Microsoft expects the acquisition to close in late 2014 and be break-even in fiscal year 2015 on a reported basis. The company will provide more details of the acquisition upon closing.

MSFT is trading at $46.33, down $0.36 or 0.78 percent on a volume of 4.92 million shares.