Take-Two Interactive, the publishing powerhouse behind the Grand Theft Auto series, will acquire the 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 approved, will create one of the world’s largest games companies $6.1 billion in pro-forma net bookings for the 12 months ended Sept. 30, 2021. The companies describe the deal as “transformative” that will deliver $100 million of annual cost savings within the first two years after closing.
Take-Two Interactive’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%.
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.
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).