Take-Two Interactive announced today that it is set to acquire mobile gaming company Zynga for $12.7 billion with a mix of cash and stock.
Founded by Ryan Brant in September 1993, Take-Two Interactive Software, Inc. is an American video game holding company based in New York City. It owns two major publishing labels, Rockstar Games and 2K. Take-Two’s combined portfolio includes franchises such as BioShock, Borderlands, Grand Theft Auto, NBA 2K, and Red Dead among others
Known for its best game, Farmville, Zynga is an American social game developer running social video game services and founded in April 2007. Other notable titles including CSR Racing, Empires & Puzzles, and Harry Potter: Puzzles & Spells.
According to the statement by Take-Two, the deal will see the company acquiring all the outstanding shares of Zynga for a total value of $9.86 per share – $3.50 in cash and $6.36 in shares of Take-Two common stock, implying an enterprise value of $12.7 billion.
The transaction represents a 64% premium to Zynga’s closing share price on January 7, 2022 and it establishes Take-Two as one of the largest publishers of mobile games, the fastest-growing segment of the interactive entertainment industry.
This creates one of the largest publicly traded interactive entertainment companies in the world, with $6.1 billion in trailing twelve-month pro-forma Net Bookings for the period ended September 30, 2021
Comments by Take-Two and Zynga management:
“We are thrilled to announce our transformative transaction with Zynga, which significantly diversifies our business and establishes our leadership position in mobile, the fastest growing segment of the interactive entertainment industry,” said Strauss Zelnick, Chairman and CEO of Take-Two. “This strategic combination brings together our best-in-class console and PC franchises, with a market-leading, diversified mobile publishing platform that has a rich history of innovation and creativity. Zynga also has a highly talented and deeply experienced team, and we look forward to welcoming them into the Take-Two family in the coming months. As we combine our complementary businesses and operate at a much larger scale, we believe that we will deliver significant value to both sets of stockholders, including $100 million of annual cost synergies within the first two years post-closing and at least $500 million of annual Net Bookings opportunities over time.”
“Combining Zynga’s expertise in mobile and next-generation platforms with Take-Two’s best-in-class capabilities and intellectual property will enable us to further advance our mission to connect the world through games while achieving significant growth and synergies together,” said Frank Gibeau, CEO of Zynga. “I am proud of our team’s hard work to deliver a strong finish to 2021, with one of the best performances in Zynga’s history. We are incredibly excited to have found a partner in Take-Two that shares our commitment to investing in our players, amplifying our creative culture, and generating more value for stockholders. With this transformative transaction, we begin a new journey which will allow us to create even better games, reach larger audiences and achieve significant growth as a leader in the next era of gaming.”
In June 2021, Take-Two acquired Top Eleven developer Nordeus making this its largest acquisition to date at the $378 million.
At the close of the transaction, Strauss Zelnick will continue to serve as Chairman and CEO, and the management team of Take-Two will continue to lead the combined company. Zynga’s highly skilled and proven management team, led by Frank Gibeau and Zynga’s President of Publishing, Bernard Kim, will drive the strategic direction for Take-Two’s mobile efforts and will oversee the integration, and day-to-day operations of the combined Zynga and T2 Mobile Games business, which will operate under the Zynga brand as its own label within the Company. Additionally, Take-Two will expand its Board of Directors to 10 members upon the closing of the transaction to add two members from Zynga’s Board of Directors.
The transaction is expected to close in Q1 of fiscal year 2023, subject to shareholder and regulatory approvals.