Take-Two Interactive Will Acquire FarmVille Creator Zynga for $12.7B

Wall Street learned this week that Take-Two will be acquiring Zynga for $9.86 a share, a 64% premium to Zynga’s closing price Friday.

Although Take-Two shares fell 13% on the news, shares of Zynga had rocketed 40%.

Take-Two Interactive is buying the mobile gaming company for $12.7 billion with a mix of cash and stock. Part of the deal would be funded by $2.7 billion in financing from JPMorgan. The remainder will come from cash on its balance sheet and the proceeds of new debt issuance.

Take-Two said Zynga shareholders will receive $3.50 in cash and $6.36 in Take-Two stock for each share of Zynga outstanding at the closing of the transaction. The deal, which is subject to regulatory and shareholder approvals, is expected to close by June 30th.

“We are trying to build a business over a very long period of time,” Take-Two CEO Strauss Zelnick told CNBC’s “Squawk on the Street” on Monday.

“We’ve paid attention to creating value for our players, for our colleagues and for our shareholders, and that’s worked out over a very long period of time.”

According to Michael Pachter, managing director of equity research at Wedbush Securities, the acquisition was a “solid move.” He has a $15 price target on Zynga stock.

“Take-Two should see an acceleration of its mobile business, including taking existing brands and turning them into mobile franchises,” Pachter told CNBC
Take-Two, known for Grand Theft Auto, reported $6.1 billion in net bookings in the 12 months ended Sept. 30, 2021.

Zelnick said he expects the deal to create $100 million in annual cost synergies within the first two years after closing and potential net bookings of at least $500 million over time.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.