The New York-based company said the deal would make it one of the largest and most diverse mobile game publishers in the industry.
Video game company Take-Two has announced plans to acquire social game developer Zynga in a deal worth $12.7 billion.
Take-Two will acquire all of Zynga’s outstanding shares for an aggregate value of $9.86 per share, in a transaction that represents a 64% premium to Zynga’s closing stock price on January 7.
The video game industry has grown rapidly over the past few years and is believed to have gained $180 billion in global revenue in 2020.
Take-Two CEO Strauss Zelnick said the deal will diversify its business and help it establish a leadership position in mobile games, which is the fastest growing segment of the entertainment industry. interactive.
“As we combine our complementary businesses and operate on a much larger scale, we believe we will deliver significant value to both sets of shareholders, including $100 million in annual cost synergies in the first two years following closing and at least $500 million in annual net booking opportunities over time,” Zelnick added.
Zynga has a diverse portfolio of popular game franchises – such as FarmVille – which have been downloaded over 4 billion times on mobile. Its CEO, Frank Gibeau, said the deal will allow the company to begin a new journey to create better games and reach a wider audience.
“Combining Zynga’s expertise in mobile and next-generation platforms with Take-Two’s best-in-class capabilities and intellectual property will allow us to advance our mission to connect the world through games while together achieving growth. and significant synergies.” Gibeau said.
As part of the transaction, Take-Two received $2.7 billion in funding from investment bank JP Morgan. It intends to fund the cash component of the transaction with a combination of cash from its balance sheet and proceeds from the issuance of new debt.
Zynga stockholders will receive $3.50 in cash and $6.36 in Take-Two common stock for each Zynga common stock outstanding upon closing of the transaction.
The transaction is expected to close during Take-Two’s first quarter of fiscal 2023, which ends June 30, 2022. The agreement has been unanimously approved by the Boards of Directors of Take-Two and Zynga.
Take-Two management will continue to lead the combined business, while the Zynga team will lead the strategic direction of the company’s mobile efforts and oversee the integration and day-to-day operations of the combined Zynga and T2 business. Mobile Games, which will operate under the Zynga brand as its own label within the company.
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