- Take-Two will pay $9.86 per share for Zynga stock, a 64 percent premium to the company’s Friday closing price.
- Zynga’s stock soared, whilst Take-Two plummeted.
- It is the latest spectacular purchase in a succession of huge acquisitions in the gaming market.
Take-Two Interactive has announced that it would purchase Zynga, a popular mobile gaming developer, for $12.7 billion in revenue and equity, signifying the efforts to better purchase in the video game sector.
The business said on Monday that it will buy all of Zynga’s share capital for $9.86 each, a 64 percent premium to the industry’s Friday closing price.
The announcement sent Zynga stock surging, while TTWO’s price plummeted. On Monday, Zynga’s stock soared 40 percent, while Take-Two’s shares dropped down to 13 percent.
For every share of Zynga outstanding at the time of the deal, Take-Two will pay $3.50 in currency and $6.36 in Take-Two shares to Zynga stockholders.
The transaction is scheduled to complete by June 30, 2022, related to regulatory and shareholder clearances.
JPMorgan will provide $2.7 billion dollars as funds to Take-Two as part of the contract. The remaining funding will be provided from cash on hand and profits from fresh debt issuance.
Whereas, Wedbush Securities managing director of equity research, Michael Pachter called the deal a “solid move.”
Regarding Zynga stock, he does have a $15 price target on shares, which is far more than Take-Two’s proposal.
“Strategic Combination” – The Major Deal
“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,” Strauss Zelnick, CEO of Take-Two, said in a press statement.
During the first two years after its closing, he predicted $100 million annual cost synergies.
The purchase is expected to finalize in the first quarter of Take-Two’s revenue of 2023 that runs from June 30, 2022, to June 30, 2023.
According to Zelnick of Investor’s Business Daily, the deal will place Take-Two on an equal footing including its two major competitors, Activision Blizzard (ATVI) and Electronic Arts (EA).
Gaming Craze in Pandemic
Zynga, well renowned for its FarmVille game, launched its career on Facebook, where it rose to become the platform’s most popular app developer.
Throughout the years afterward, Zynga has shifted its attention to mobile, expecting to profit from the smartphone era’s tremendous development.
Whereas the firm was formerly seen as the main benefactor of Covid-19’s stay-at-home habits, its stock has dropped about 38% in the last year, with certain investors doubting if the pandemic gameplay craze would last in the long run.
Take-Two vs Zynga Inc.
Zynga, Inc. is a company that specializes in social gaming. It creates, promotes, and manages social games as interactive services for mobile devices just like Apple’s iOS and Google’s Android operating systems, as well as social networking sites like Facebook.
Based in New York City, Take-Two gaming company is quite popular for its games such as “Grand Theft Auto,” “Red Dead Redemption,” and “NBA 2K.” These are among Take-Two’s most well-known console and PC gaming series.
Now, when it comes to mobile gaming, “Empires & Puzzles,” “Toon Blast,” “Words With Friends,” and “Zynga Poker” are some of Zynga’s popular smartphone games, which is a San Fransisco-based company.