Home / Tech / ‘Farmville’ Maker Zynga Bought by Take-Two for $11 Bln in Mobile Gaming Push

‘Farmville’ Maker Zynga Bought by Take-Two for $11 Bln in Mobile Gaming Push

‘Farmville’ Maker Zynga Bought by Take-Two for  Bln in Mobile Gaming Push

Take-Two Interactive said on Monday it would buy Zynga for $11.04 billion in a deal that will bring the smash-hit video game “Grand Theft Auto” and mobile-friendly “FarmVille” under one roof as demand for affordable on-the-go gaming surges. The deal, one of the biggest in the sector, will create a gaming powerhouse spanning console, PC and mobile devices and comes as people increasingly gravitate toward smartphone games. Take-Two, also known for adventure game “Red Dead Redemption”, offered $9.86 per share for the deal, representing a 64 percent premium to the last closing price of Zynga shares. Including debt, the acquisition is worth $12.7 billion.

ALSO READ: Game Over for FarmVille on Facebook as Web Browsers Say Goodbye to Adobe Flash Player

“It’s a bombshell deal … Zynga was on the list of potential M&A transactions for a long time in the video game business,” said Serkan Toto, CEO of videogame consulting firm Kantan Games.

“Take-Two is looking at the industry map and says ‘we have basically nothing here.’ So, a lot of people have been have been expecting Take-Two to make a big deal in mobile to close the gap with competitors like Electronic Arts for example.”

‘Zynga’s Own Acquisitions in Last Two Years’

Electronic Arts bought Glu Mobile for $2 billion last year. Zynga itself has made a string of acquisitions in the past two years, including Echtra and Chartboost. The mobile gaming sector is expected to reach a market size of $116.4 billion by 2024, growing at a compound annual growth rate of 11.2 perecnt from 2019 to 2024, according to gaming market data firm Newzoo.

Zynga’s aggressive dealmaking and Apple’s move to allow iPhone users to opt out of being tracked by advertisers dented the company’s shares, erasing 35 percent of their value in 2021. It has also missed Wall Street’s profit targets in the past three quarters.

“It is a big price tag for a company that has not consistently produced profits or new blockbusters,” said Erik Gordon, professor at Ross School of Business, University of Michigan.

Take-Two has $2.7 billion financing from J.P. Morgan and intends to fund the rest with cash and proceeds of a new debt issuance. It expects about $100 million in annual cost savings within the first two years, and more than $500 million in net bookings over time when the deal closes in mid-2022.

Read all the Latest News, Breaking News and Coronavirus News here.

News Source link

Check Also

Astronomers discover ‘spooky’ object that releases a giant burst of energy in our galactic backyard- The New Indian Express

Astronomers discover ‘spooky’ object that releases a giant burst of energy in our galactic backyard- The New Indian Express

By Online Desk A team mapping radio waves in the Universe has discovered something unusual …