Take-Two makes a play for Zynga in $12.7bn deal
Gaming giants combine as JP Morgan lends almost $3bn to fund the cash element of the transaction
Take-Two has announced the $12.7bn acquisition of leading free-to-play and social casino games publisher Zynga.
Take-Two, the firm behind video games publishers such as Rockstar Games and 2K, will acquire 15-year-old Zynga in a combination of cash and stock.
This values the California-based casual games developer behind social casino titles Zynga Poker, Wizard of Oz Slots, and Hit it Rich! at $9.86 per share based on market close of January 7.
Under the terms of the deal, Zynga shareholders will receive $3.50 in cash and $6.36 in shares of Take-Two common stock for each share of Zynga stock.
The combined entity now boasts $769m in operating cash flow, with Take-Two anticipating around $100m of annual cost synergies within the first two years of the deal closing.
Take-Two also noted it had identified more than $500m in incremental annual net bookings (net amount of products sold) via the deal.
The deal is expected to close during Q1 of Take-Two’s FY 2023, which ends on 30 June 2022.
JP Morgan and LionTree Advisors served as financial advisors to Take-Two and Willkie Farr & Gallagher LLP as legal counsel.
Additionally, JP Morgan has committed $2.7bn in financing to Take-Two to help fund the cash element of the deal.
Zynga’s leadership team Frank Gibeau and Bernard Kim will “drive the strategic direction for Take-Two’s mobile efforts and will oversee the integration” as Zynga continues to operate as its own label within the company.
Take-Two’s board of directors will expand to 10 members to accommodate two members from Zynga’s board of directors.
Strauss Zelnick, Take-Two chair, said: “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.
“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,” he added.
Gibeau, Zynga CEO, commented: “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,” he concluded.
As news of the Take-Two deal was announced, Zynga’s share price rocketed 44% from a close of $6 on Friday to $8.68 at midday ET on Monday.