A deal worth $5.9 billion (£3.8 billion).
Activision stated that the acquisition would result in it being the world leader in interactive entertainment across console, PC and mobile platforms.
Activision Blizzard added that the joint firm would have over half a billion monthly active users in 196 countries.
One of the world’s best selling console games is the Call of Duty series, and Candy Crush Saga is one of the most popular games on mobile devices.
Bobby Kotick, Activision Blizzard chief executive, said in a statement that with a joint global network of over half a billion monthly active users, their potential to reach people around the world on their chosen device allows them to bring great games to even larger audiences than ever before.
Mr Kotick stated that the company wanted to widen its reach and appeal to a bigger demographic.
He stated that 60% of King Digital Entertainment’s users were female, and that no games hardware or console, other than a smartphone, was required to access its games.
King Digital Entertainment has centred their business model on allowing players to play a game for free, but pay for additional features.
Due to the international success of Candy Crush Saga, this has resulted in its exposure to high growth markets in Asia, such as South Korea, Japan and China.
Activision Blizzard’s games are played on expensive computers or video game consoles, with the games costing between £20 – £40.
King Digital Entertainment, whose main offices are in Stockholm and London, will still operate as an independent unit led by Riccardo Zacconi, chief executive.
Activision Blizzard is offering $18 cash for each King share and the deal is predicted to increase Activision’s earnings by about 30%.
Candy Crush was first released on Facebook and smartphones in 2012, grabbed the public imagination and is still making up about one third of the company’s revenue.
The company is yet to repeat the success it found with Candy Crush Saga, even though it has produced more than 200 games, including Farm Heroes and Bubble Witch.
With the launch of Candy Crush Saga in 2014, King Digital Entertainment helped improve its number of daily active users; however there has been a decrease in user spending on their number one game.
The deal is expected to be in finalized by the second quarter of 2016, if shareholders and regulators approve.