Take-Two to acquire mobile gaming giant Zynga for $12.7B

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There is tremendous consolidation going on in the gaming world. Today Take-Two Interactive announced It plans to acquire mobile games giant Zynga for $9.861 per share, $3.50 in cash and the remaining $6.361 in shares of Take-Two common stock. The deal gives Zynga an enterprise value of $12.7 billion.

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The deal will bring together two gaming powerhouses, Take-Two in console and PC games (including iconic titles like Grand Theft Auto) and Zynga with a slew of mobile games, a genre that was largely defined by the company ( It’s behind FarmVille, Empires & Puzzles, Words With Friends and more).

Take-Two said, the deal would result in $6.1 billion in 12-month pro-forma net bookings (ending September 30, 2021), making it one of the largest gaming companies overall, regardless of platform.

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The transaction is expected to close in the first quarter of fiscal year 2023, subject to shareholder and regulatory approvals.

Strauss Zelnick, Chairman and CEO of Take-Two, said, “We are thrilled to announce our transformational transaction with Zynga, which significantly diversifies our business and establishes our leadership position in mobile, interactive entertainment. The fastest growing segment of the industry.” Statement. “This strategic combination brings together our best-in-class console and PC franchise, a market-leading, diverse mobile publishing platform with a rich history of innovation and creativity. Zynga also has an extremely talented and deeply experienced team, and we look forward to welcoming them to the Take-Two family in the months to come. As we combine and scale our complementary businesses, we believe we will deliver significant value to both sets of stockholders, including $100 million of annual cost synergies within the first two years and at least $500 million annually. Net booking opportunities over time. ,

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“Combining Zynga’s expertise in mobile and next-generation platforms with Take-Two’s best-in-class capabilities and intellectual property allows us to continue our mission of connecting the world through games while simultaneously achieving significant growth and synergies.” going forward,” said Frank Gibeau, Zynga’s CEO. “I am proud of our team’s hard work to deliver a strong finish by 2021, with one of the best performances in Zynga history. We are incredibly excited to have a partner at Take-Two who will invest in our players. , shares our commitment to growing our creative culture and creating greater value for shareholders. With this transformational transaction, we begin a new journey that will help us create even better games, reach a larger audience and will allow us to achieve significant growth as a leader in the next era of gaming.”

Strauss Zelnick will lead the larger company, with Gibeau and Zynga’s president of publishing, Bernard Kim, overseeing the larger mobile business (including integrating Zynga with Take-Two’s existing mobile operations).

As with many other consolidation moves, it is about cost savings through synergies. Take-Two said the deal would help the big business save about $100 million annually after two years (the first integration would come). Take-Two already has several mobile game titles and has expanded its franchise into mobile, but this will give the company a much larger stake in the space.

It’s important to consider how Zynga has performed over the years. Since the huge jump in its share price since it first went public, the company has been on a rollercoaster and the past year has seen its price rise. share price drop, making it an acquisition target.

This move also marks the end of an era of sorts. As a startup based out of San Francisco’s SOMA district, just as the city was coming into its own as a technology hub separate from Silicon Valley, it was an early mover in opening up and scaling the mobile gaming opportunity.

It initially gained heavy traction as a social gaming giant leaning on growth via Facebook’s social graph, but as it became annoying and spammy, over time Facebook changed the rules and increased Zynga’s audience. Supply cut off. In general, the mobile gaming market has proven more uncertain in terms of consumer taste and use, and so much of Zynga’s success has been based around finding (and sometimes acquiring) the next hot new title and franchise to replace. Is. whose popularity has declined. (One of its big recent acquisitions, in 2020, was the acquisition of Turkey’s Peak Games, which had already established traction with Toon Blast and Toy Blast, for $1.8 billion.)

The combination with Take-Two, which also publishes Red Dead Redemption, Midnight Club, NBA 2K, BioShock, Borderlands, Civilization, Mafia and Kerala Space Program, will give it a large library of franchises and IPs from which to build new mobile gaming experiences. To be. , Similarly, Zynga’s IP can now get new traction in different formats and different screens.

What’s interesting is whether and how the larger company will use its expanded content IP to think about how it engages with the mass market. So much of the action in gaming these days happens on platforms where people meet to discuss games and be social with each other, whether it’s on Twitch, Discord or anywhere else.

The gaming market has caught the attention of more people in the past few years as one of the “winners” in the wake of the COVID-19 pandemic and looking for variety while staying at home. Take-Two quoted figures that said the overall mobile gaming industry saw $136 billion in gross bookings in 2021 and is currently growing at 8%. Mobile will now account for half of Take-Two’s bookings, it said.

more to come

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