Shares of American video game developer Zynga soared over 50% early on Monday, on news that Take-Two Interactive will purchase the company for $9.861 per share. The transaction will be $3.50 in cash plus $6.361 in shares of Take-Two common stock (total of $9.861 per share), with a total enterprise value of approximately $12.7 billion. The purchase is a 64% premium versus Zynga's closing share price on Jan. 7.
The merger brings Take-Two's portfolio of console and PC games and Zynga's mobile games and will transform Take-Two into a juggernaut as one of the largest and most diversified video game publishers in the world, with $6.1 billion in Pro-forma Net Bookings for the trailing twelve-month period ended Sept. 30, 2021.
"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," said Strauss Zelnick, Chairman and CEO of Take-Two.
"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 also has a highly talented and deeply experienced team, and we look forward to welcoming them into the Take-Two family in the coming months. As we combine our complementary businesses and operate at a much larger scale, we believe that we will deliver significant value to both sets of stockholders, including $100 million of annual cost synergies within the first two years post-closing and at least $500 million of annual Net Bookings opportunities over time."
The two companies are creators of some of the most iconic games in recent years - Take-Two developed Grand Theft Auto, while Zynga's portfolio includes FarmVille.
"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," said Frank Gibeau, CEO of Zynga.