Take-Two Interactive, the company behind the popular Grand Theft Auto game series, has agreed a $12.7 billion (€11.2 billion) deal to buy mobile gaming specialist Zynga, the maker of FarmVille and Words with Friends.
The cash-and-shares deal values Zynga’s equity at $9.86 per share, a premium of 64 per cent to its closing price on Friday. Under the terms of the transaction announced on Monday, Zynga shareholders will receive $3.50 in cash and $6.36 in Take-Two stock for each of their shares.
The companies said the combination would allow them to better compete with large traditional gaming incumbents such as Activision Blizzard and EA, which have also been buying new assets to expand their mobile offerings.
Take-Two said the acquisition of Zynga would establish it “as one of the largest publishers of mobile games, the fastest-growing segment of the interactive entertainment industry”.
Take-Two chief executive Strauss Zelnick will lead the combined group. Zynga chief executive Frank Gibeau and its president of publishing, Bernard Kim, will be in charge of Take-Two's mobile business and will oversee the integration of the two companies.
Zynga will also have two out of the 10 seats on Take-Two’s board of directors.
Together, the two companies generate $6.1 billion in annual revenues, according to a statement by Take-Two.
Zynga had been on an acquisition spree in recent months as it aimed to capitalise on the gaming boom that was accelerated by pandemic-induced lockdowns, as well as expand into games that can be played on multiple devices.
In 2020, the San Francisco-based company bought Turkey’s Peak Games for $1.8 billion. Last year, it acquired game studio Echtra Games. The terms of the deal were not disclosed.
In May, Zynga bought advertising technology company Chartboost for $250 million, bringing its ability to personalise game ads in-house after Apple changed its privacy and tracking rules.
The decision to combine comes as other larger gaming companies invest heavily in mobile gaming. Activision Blizzard, which is behind Call of Duty, acquired Candy Crush Saga maker King in 2015 for $5.9 billion. EA bought Glu Mobile, which is best known for its game involving an animated Kim Kardashian, for $2.4 billion in 2021, and Codemasters, which has a roster of racing games including F1, for $1.2 billion in 2020.
Zynga’s shares surged 52 per cent in pre-market trading in New York, while those of Take-Two fell nearly 9 per cent.
Take-Two has received financing of $2.7 billion from JP Morgan and intends to fund the rest with cash from its balance sheet and proceeds of new debt issuance.
Take-Two expects about $100 million in annual cost savings within the first two years after completion, and more than $500 million in adjusted revenue over time. – Copyright The Financial Times Limited 2022/Reuters