December 1, 2022

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Take-Two buys Zynga for $12.7B enterprise value


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Take-Two, the maker of Rockstar Games’ Grand Theft Auto games, is buying mobile social game publisher Zynga for an enterprise value of $12.7 billion.

New York-based Take-Two is buying Zynga for $9.861 a share, a 64% premium over Zynga’s closing share price on January 7. Take-Two, whoxe games include Grand Theft Auto V and Red Dead Redemption 2, will pay $3.50 a share in cash and $6.361 per share in Take-Two common stock.

The move will trigger a big consolidation in gaming, combining Take-Two’s success in hardcore video games with its Rockstar Games label and Zynga’s strong position in mobile social games such as Words With Friends, Zynga Poker, and Empires & Puzzles.

“I’m excited to be here today to usher in what will be a transformative moment for Zynga and Take-Two’s players, employees, and shareholders,” said Frank Gibeau, CEO of Zynga, in a call with analysts.

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The combined company will combine Take-Two’s portfolio of console and PC games with Zynga’s focus on mobile titles, with $6.1 billion in trailing twelve-month pro-forma net bookings for the period ended September 30, 2021.

“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, in a statement. “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.”

He added, “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.”

Zynga has 183 million monthly active users. The transaction is expected to deliver approximately $100 million of annual cost synergies within the first two years after closing, and more than $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 Gibeau, in a statement. “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.”

 

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