Take-Two, the game studio behind Grand Theft Auto and NBA 2K, is paying up to buy mobile gaming giant Zynga. Take-Two is purchasing the Farmville developer for $12.7 billion. 🤑
Take-Two hopes that its cash-and-stock acquisition will give the company a stronger position in the mobile gaming space. In recent years, the company has shelled out for mobile game studios like SocialPoint and Playdots. However, Zynga is built different. In addition to the company’s giant mobile gaming footprint, it also has a strong in-house ad business that serves its free-to-play games. According to Take-Two Chief Executive Strauss Zelnick, “More than 50% of our net bookings will come from mobile” after acquiring Zynga.
However, to buy the multi-billion-dollar giant, Zelnick & Co. had to offer a beefy premium. Take-Two offered a 64% premium and will fork out $9.86 for each share of the company. $6.36 of each share will be paid in stock, while the remaining $3.50 will be paid in cash. 💰 💰
Many industries have witnessed increased M&A activity during the pandemic, but the video game industry (and the metaverse world) have been huge benefactors of the pandemic. Gaming and “the metaverse” are colloquially intertwined, and tech giants like Facebook and Microsoft are making their presence known. 💪 $FB rebranded to Meta earlier this year to catch the potential upside of the metaverse trend, $MSFT paid $7.5 billion to acquire Zenimax (owner of Bethesda, the creator of Fallout and Elder Scrolls), and $EA paid over $6 billion to acquire three studios since the pandemic started.
Ultimately, Take-Two’s deal isn’t huge in a relative sense, but it does represent an ongoing interest in virtual worlds/the gaming space.
The news sent Zynga ($ZNGA) shares rising 40% today, while shares of Take-Two ($TTWO) fell to the tune of 13%.