Social gaming and mobile pioneering company Zynga Inc. (ZNGA:NASDAQ) and renowned PC gaming giant Take-Two Interactive Software (TTWO:NASDAQ), today announced that the companies have entered into a definitive agreement, whereby "Take-Two will acquire all of the outstanding shares of Zynga in a cash and stock transaction valued at $9.861 per Zynga share, based on the market close as of January 7, 2022, with a total enterprise value of approximately $12.7 billion."
The firms advised that the merger agreement stipulates that Zynga stockholders will each receive $3.50 in cash and $6.361 in shares of Take-Two common stock for each share of Zynga common stock owned upon closing. The report stated that the total aggregate share price represents a 64% premium over Zynga's closing share price on Friday, January 7, 2022.
The merged company will bring together yearly revenue bookings totaling over $6 billion in the interactive gaming and entertainment space with a strong presence across the PC, online, mobile and third-party gaming console system makers.
The merger will serve to bring Take-Two's leading iconic brands and franchises including Grand Theft Auto®, NBA 2K®, and Mafia®, just to name a few, with Zynga's portfolio, which includes well know household names such as FarmVille™, Harry Potter: Puzzles & Spells™, Merge Dragons!™, Toon Blast™, Words With Friends™, Zynga Poker™ under the same roof.
Take-Two Interactive's Chairman and CEO Strauss Zelnick commented, "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…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's CEO Frank Gibeau remarked, "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."
The companies believe that the combined company will be well-positioned to benefit from its leadership position in mobile and a positive industry outlook, as evidenced by the rise of the video game sector to what is now the largest vertical in the entertainment industry. During 2021, the mobile gaming industry in aggregate posted total gross bookings of around $136 billion.
Take-Two expects that expertise obtained from Zynga will allow it to greatly expand its mobile offerings for some of its most popular games including Dragon City, Monster Legends and several others and allow the company to achieve a stronger presence in mobile gaming formats like casual, lifestyle, social casino and sports games.
The company also believes it will be able to boost revenues from the newly acquired Zynga assets by as much as $500 million annually and save about $100 million yearly in cost synergies within the first two years after closing.
The transaction has already been unanimously approved by each company's respective Boards of Directors and is expected to be completed by June 30, 2022, subject to approval by Take-Two and Zynga stockholders, ordinary closing conditions and applicable regulatory approval.
The report mentioned that Strauss Zelnick and the rest of Take-Two's management team will continue to lead the combined company. Zynga's CEO Frank Gibeau and President of Publishing Bernard Kim will assume key roles in overseeing Take-Two's strategic direction and mobile efforts.
Take-Two is headquartered in New York City and is a global developer, publisher, and marketer of interactive entertainment for consumers worldwide. The company products are distributed largely through its platforms Rockstar Games, 2K, Private Division, and T2 Mobile Games. The firm's products are offered for cross-platform use across PCs, console systems and mobile devices and are available through physical retail sale, download, online streaming access.
Zynga is a global leader in providing interactive social gaming and entertainment services. The company employs approximately 3,000 people and its games are available in over 175 countries. The firm notes that to date, its games have been downloaded more than four billion times via mobile devices. Zynga has a vast diverse product portfolio which includes many well-known game titles such as CSR Racing™, Empires & Puzzles™, FarmVille™, Merge Dragons!™, Toy Blast™ and Zynga Poker™.
Zynga started off the day with a market cap of around $6.7 billion with approximately 1.12 billion shares outstanding and a short interest of about 4.1%. ZNGA shares opened 48% higher today at $8.90 (+$2.90, +48.33%) over Friday's $6.00 closing price. The stock has traded today between $8.60 and $8.91 per share and is currently trading at $8.41 (+$2.41, +40.17%).
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