Take-Two Interactive, the games-publishing powerhouse behind the “Grand Theft Auto” series, plans to acquire casual mobile-games vendor Zynga, whose titles include “FarmVille” and “Words With Friends,” in a cash-and-stock deal worth $12.7 billion.
The deal, if it goes through, will create one of the world’s largest publicly traded games companies — with $6.1 billion in pro-forma net bookings for the 12 months ended Sept. 30, 2021. The companies said the “transformative” deal will deliver $100 million of annual cost savings within the first two years after closing.
Take-Two’s deal for Zynga would expand the presence of Take-Two, a major publisher in console and PC games, in the casual-gaming market via Zynga’s portfolio of puzzle and social games. Under the terms of the proposed acquisition, Zynga shareholders would receive $9.86 for each Zynga share that they own, comprising $3.50 in cash and $6.36 of Take-Two stock.
Take-Two’s deal for Zynga is expected to close during the second quarter of 2022, subject to approval by both companies’ stockholders and applicable regulatory approvals.
Shares of Zynga shot up 47% in early trading Monday on news of the proposed merger, while Take-Two’s stock fell 12%.
Take-Two’s games, in addition to Rockstar Games’ long-running “GTA” franchise, include “Red Dead Redemption,” “Midnight Club,” “NBA 2K,” “BioShock,” “Borderlands,” “Civilization,” “Mafia” and “Kerbal Space Program.” Zynga’s portfolio includes titles such as “CSR Racing,” “Empires & Puzzles,” “FarmVille,” “Golf Rival,” “Hair Challenge,” “Harry Potter: Puzzles & Spells,” “High Heels!,” “Merge Dragons!,” “Toon Blast,” “Toy Blast,” “Words With Friends” and “Zynga Poker.”
The addition of Zynga, which has about 3,000 employees, will scale up Take-Two’s mobile games offerings, which include such titles as “Dragon City,” “Monster Legends,” “Top Eleven,” “Two Dots” and “WWE SuperCard.” Take-Two has about 5,800 employees.
The combined company would be led by Strauss Zelnick, chairman and CEO of Take-Two. Zynga would continue as a label under the Take-Two umbrella, led by current Zynga CEO Frank Gibeau and president of publishing Bernard Kim. 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.
“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,” Zelnick said in announcing the deal.
Zynga’s Gibeau commented, “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…. 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.”
Take-Two’s proposal to acquire Zynga includes a “go-shop” provision, under which Zynga and its board may “actively solicit, receive, evaluate, and potentially enter negotiations with parties that offer alternative proposals” over the next 45 days (expiring on Feb. 24, 2022).
(Pictured above: Zynga’s San Francisco headquarters)