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By Mia Shanley and Sven Nordenstam
STOCKHOLM (Reuters) - King, the firm behind hit mobile phone game Candy Crush Saga, is planning a U.S. stock market debut which some analysts think could value it at more than $5 billion and herald a flurry of technology company listings this year.
The successful flotation of Twitter in November and a surge in Facebook shares have fueled speculation that a string of technology firms could come to market, including Spotify, AirBnB and Square, as well as King.
But some analysts question whether King can keep up its breakneck pace of growth, particularly given the difficulty some other games makers have experienced in maintaining success.
Zynga, the maker of Farmville, has seen its share price halve since its late 2011 initial public offering (IPO), while Finland's Rovio has struggled to replicate the success of its 2010 hit Angry Birds.
"It's (Candy Crush Saga) a hot game and King is a fast-growing company, but obviously you have precedents for these type of companies that have been affected by the boom and bust cycles of the game market," said Josef Schuster, founder of IPOX Schuster, a Chicago-based IPO research and investment house.
Candy Crush Saga, which involves moving candies to make a line of three in the same color, was the most downloaded free app of 2013, and the year's top revenue-grossing app.
It has been downloaded more than 500 million times since its launch in 2012. The basic games are free, but players need to pay for add-ons or extra lives.
The IPO prospectus offered a first glimpse into King's money-making machine, which generated $1.9 billion in revenues in 2013, or $5 million a day. It posted adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $825 million in the year, up from $28.5 million in 2012.
By comparison, Zynga and Supercell, the company behind Clash of Clans, both earned around $900 million in revenues last year.
Adam Krejcik, an analyst at Eilers Research in California, said the results in King's U.S. filing were "staggering", but noted a slowdown in quarterly revenues at the end of 2013.
"Have we seen peak revenue and bookings for King, or can they make up for declines with other games?" he questioned.
King co-founder and CEO Riccardo Zacconi said the group, which is 48.2 percent-owned by private equity firm Apax Partners, had so far launched five games for mobile phones and all had attracted substantial fan-bases.
"Mobile usage is exploding and games are commanding the lion's share of time spent," he said in the prospectus.
"Consumption habits have changed - mobile has meant that people consume more digital content than they ever have before, and they want to be entertained over short periods of time whenever and wherever they are."
Japanese tech and telecoms group Softbank bought 51 percent of Supercell late last year, valuing the firm at $3 billion, or around 6.5 times its 2013 EBITDA.
Applying the same multiple to King's 2013 EBITDA would value the firm at around $5.3 billion.
"The risk here is that the company is valued beyond the $7-$10 billion range because it is a hot company," Schuster said. "On the first or the second day of trading the company is going to be an expensive buy and if the stock does well in the first month or so there is no room for upside."
King, which plans to list on the New York Stock Exchange under the symbol "KING", intends to raise up to $500 million in the listing, but the amount a company says it plans to raise in its first IPO filings is used to calculate registration fees and the final size of the IPO could be different.
Founded in Sweden in 2003, King was profitable in 2005 and has not had a funding round since September of that year, when it raised 34 million euros ($46 million) from Apax and Index Ventures.
In the last few months, it has made more than $500 million in dividend payments - including a $217 million payout this month - to its board of directors, its top executives and major investors. Index Ventures owns 8.3 percent of King.
King offers 180 games in 14 languages through mobile phones, Facebook and its own website, but is heavily reliant on Candy Crush Saga, which brings in about three quarters of its revenues. The company says its games are played more than 1 billion times a day.
JP Morgan, Credit Suisse and BofA Merrill Lynch have been appointed to lead the IPO. (http://link.reuters.com/xax86v)
(Additional reporting by Leila Abboud in Paris, Tanya Agrawal and Avik Das in Bangalore, Editing by Alistair Scrutton and Mark Potter)