Take-Two buys Farmville creator Zynga for $ 12.7 billion

Take-Two, the creator of the NBA2K video game franchise, has announced a deal to acquire Farmville creator Zynga. – © AFP

Video game publisher Take-Two announced on Monday that it has reached a deal to acquire “Farmville” creator Zynga for $ 12.7 billion, as part of a major mobile game campaign by the maker of “Grand Theft Auto “.

The merger brings together Take-Two, a leader in console and personal computer games, with a company strong in interactive games played on mobile devices, such as “Farmville”, which first became a phenomenon in the 2010s on Facebook.

The deal comes as Take-Two plans more smartphone versions of its games, which also include Red Dead Redemption and NBA2K.

The transaction also aims to promote Take-Two’s growth outside of its core markets in the United States and Western Europe. Take-Two officials pointed out that Zynga is present in more than 175 countries.

Zynga’s games are generally free, and the company generates revenue through the sale of virtual items and in-game advertisements.

“We are delighted 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,” said Managing Director of Take-Two, Strauss Zelnick, in a statement.

Zelnick, in a conference call with analysts, highlighted Zynga’s expertise in “free-to-play” games that could enable greater growth in India, parts of Latin America and the Middle -East.

“We have basically 80 percent of the world’s geography which is a creative opportunity for us,” Zelnick said. “A lot of this geography is really free-to-play driven and that’s where Zynga’s expertise lies.”

The transaction prices Zynga at $ 9.86 per share, a 64% premium over Friday’s share price.

About a third of the payout will be in cash and the rest in Take-Two shares.

Zelnick is set to lead the combined company, with the Zynga team led by Managing Director Frank Gibeau and publication president Bernard Kim overseeing the combined company’s mobile gaming efforts.

New York-based Take-Two had $ 3.4 billion in revenue at the end of its last fiscal year and just under 5,100 employees. Zynga, based in San Francisco, had sales of $ 2.0 billion and approximately 3,000 employees.

The agreement includes a “go to store” provision that allows Zynga and its representatives to solicit and receive alternative offers for 45 days. The transaction is expected to close in spring 2022, the companies said.

Zynga shares climbed 44.6% on the Nasdaq to $ 8.68 on Monday morning, while Take-Two shares fell 14.6% to $ 140.65.

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