The deal is worth $5.9bn (£3.8bn).
Activision said the acquisition would make it a global leader in interactive entertainment across mobile, console and PC platforms.
It added the combined firm would have more than half a billion monthly active users in 196 countries.
The
Call of Duty series is one of the world's best selling console games,
while Candy Crush Saga is among the most popular games on mobile
devices.
Video game publishers are switching from the physical
sale of games to digital growth as consumers move from consoles to
playing on smartphones and tablets.
Wider appeal
In
a statement, Activision Blizzard chief executive Bobby Kotick said:
"With a combined global network of more than half a billion monthly
active users, our potential to reach audiences around the world on the
device of their choosing enables us to deliver great games to even
bigger audiences than ever before."
Mr Kotick told the Reuters news agency that the company wanted to broaden its reach and appeal to a larger demographic.
He
said that 60% of King Digital Entertainment's players were female, and
that no games console or hardware, besides a smartphone, was needed to
access its games.
Activision Blizzard is paying $18 in cash for
each King share, and the deal is expected to boost Activision's adjusted
revenue and earnings by about 30%.
King Digital Entertainment,
which has its main offices in London and Stockholm, will continue to
operate as an independent unit led by chief executive Riccardo Zacconi.
Mr
Zacconi said: "Since 2003, we have built one of the largest player
networks on mobile and Facebook, with 474 million monthly active users
in the third quarter 2015.
"We believe that the acquisition will position us very well for the next phase of our company's evolution."
King Digital Entertainment floated on the New York Stock Exchange in March last year with a valuation of almost $8bn.
Candy
Crush Saga, which was first launched on Facebook and smartphones in
2012, caught the public imagination and still makes up about a third of
the company's revenue.
Even though the company has produced more
than 200 games, including the popular Bubble Witch and Farm Heroes, it
has yet to replicate the success it found with Candy Crush.
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