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Shares of game company Zynga soared on news of its purchase by Take-Two Interactive

10 January 2022
2693
2 min.
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Shares of game company Zynga soared on news of its purchase by Take-Two Interactive

Take-Two and Zynga

Take-Two Interactive (TTWO) announced today that it has acquired Zynga, a well-known major mobile game maker, in hopes of expanding its business and achieving annual savings of about $100 million. The deal continues a trend of mergers in an industry where competition is heating up.

Two major video game makers announced the deal Monday, with Take-Two Interactive (TTWO) buying all of the outstanding shares of Zynga (ZNGA) for $12.7 billion.

Zynga shares jumped 53% before the premarket opened trading, while Take-Two shares fell 10.7%.

Under the terms of the deal, Zynga shareholders will receive $8.50 in cash and $6.36 in shares after the deal closes, totaling $9.86 per Zynga share. The purchase price represents a 64% premium to Zynga's closing share price on Jan. 7.

Take-Two expects the purchase of Zynga to bring it long-term benefits, sales growth and a stronger market position, given that it faces a number of strong competitors, including Activision Blizzard (ATVI) and Electronic Arts (EA).

Take-Two will use $2.7 billion in financing from JPMorgan, its own cash and proceeds from a new debt issuance to make the purchase.

The deal is expected to be completed during the first quarter of Take-Two's fiscal year ending June 30, 2022.

Take-Two's purchase of Zynga echoes a move by rival Electronic Arts last year, when EA acquired mobile game maker Glu Mobile for $2.4 billion, as game studios look to expand their mobile game development teams as the number of gamers on mobile platforms grows.

Shares of Take-Two Interactive, the developer of the world-famous $19 billion Grand Theft Auto video game, are down 13.6% for 2021, after a 40% rise in 2020.

Shares of Zynga, developer of such mobile video games as FarmVille, Empires and Puzzles, CSR Racing, and Zynga Poker, with a market capitalization of $6.8 billion, have lost nearly 40% in the past year, after rising more than 60% in 2020.

Analysts attributed the drop in these stocks to what investors saw as excessive growth in 2020, wondering how much of the "gaming boom" will continue after the pandemic ends.

Companies6 in the news

Zynga
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Take-Two Interactive
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Activision Blizzard
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Glu Mobile
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Electronic Arts
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JPMorgan Chase
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Source foto:
https://upload.wikimedia.org/wikipedia/commons/thumb/6/6a/zynga_hq.jpg/1024px-zynga_hq.jpg

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