Take-Two Interactive announces $12.7B deal to acquire Zynga
Gaming giant Take-Two Interactive has announced that it will acquire mobile gaming company Zynga in a $12.7 billion deal that could be one of the industry's largest.
Zynga banner
The cash and stock deal, which the companies expect to close in the first quarter of 2023, will make Take-Two Interactive one of the largest publisher of mobile game.
Take-Two is known for game franchises like "Grand Theft Auto," "BioShock," and "Red Dead." Zynga, on the other hand, has re-established itself as a mobile juggernaut with titles such as "Words with Friends," "Farm Heroes" and "Zynga Poker" across iOS and other platforms.
"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 Take-Two CEO and Chairman Strauss Zelnick.
As part of the deal, Zynga stockholders will receive $3.50 in cash and $6.36 in shares of Take-Two common stock for each share of Zynga stock they own at closing.
Take-Two said that the deal will result in about $6.1 billion of 12-month pro-forma net bookings. It will also help the company save about $100 million annually.
"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, Zynga's CEO.
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Zynga banner
The cash and stock deal, which the companies expect to close in the first quarter of 2023, will make Take-Two Interactive one of the largest publisher of mobile game.
Take-Two is known for game franchises like "Grand Theft Auto," "BioShock," and "Red Dead." Zynga, on the other hand, has re-established itself as a mobile juggernaut with titles such as "Words with Friends," "Farm Heroes" and "Zynga Poker" across iOS and other platforms.
"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 Take-Two CEO and Chairman Strauss Zelnick.
As part of the deal, Zynga stockholders will receive $3.50 in cash and $6.36 in shares of Take-Two common stock for each share of Zynga stock they own at closing.
Take-Two said that the deal will result in about $6.1 billion of 12-month pro-forma net bookings. It will also help the company save about $100 million annually.
"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, Zynga's CEO.
Read on AppleInsider
Comments
https://zyngainc.gcs-web.com/static-files/5b5771d0-52d1-4b91-8381-e86bdf8c8237
Latest 2021 quarterly is here:
https://zyngainc.gcs-web.com/static-files/6c50be4b-7b76-4cdb-9b5d-24e529ca5c33
Their top games are Empires and Puzzles, Merge Dragons and Zynga Poker. These 3 games made over $800m in 2020. Total revenue in 2020 was $1.97b and $2.1b in 9 months in 2021. They made over $400m loss in 2020 but they managed to cut costs a lot in 2021. One of their significant costs is ads to attract new players, they spent $583m in 2020 on Facebook and Google ads. They also made $300m on ads in their games, mainly Words with Friends.
Microsoft bought Zenimax for $7.5b, which includes Arkane (Dishonored, Wolfenstein, Deathloop), Bethesda (Elder Scrolls, Fallout), id (Doom, Quake). It's quite a few popular franchises but most of them don't sell many copies. Arkane games are around 2 million copies. The Bethesda games are the biggest ones but they sell over a long period of time. Elder Scrolls and Fallout sell tens of millions of copies but even considering the 30 million copies of Elder Scrolls, if every copy was $60, that's still only $1.8b and they don't all sell at $60 and not all in 1 year. Zynga has recurring, growing revenue that exceeds AAA games.
The problem with mobile is it seems to be mostly driven by addictive games rather than quality. The mobile game charts hardly ever change. AAA is all about quality experiences but they are really expensive to produce and usually have low recurring revenue, this leads to making sequels of their most popular franchises. The Call of Duty games have a good mix of quality single player and recurring online multiplayer.
Companies like Take Two will have seen how much revenue games like Fortnite, Minecraft, Call of Duty Mobile have been making and the revenue growth. They need to stay competitive with companies like Tencent:
https://www.theverge.com/2021/4/4/22367089/tencent-timi-studios-call-of-duty-mobile-10-billion-2020
Companies like Tencent are using their revenues to buy up as much of the gaming industry as they can. Even when mobile gaming isn't directly a threat to non-mobile game companies, having profitable mobile game companies buying up the strongest players in the industry definitely is.
I don't think it's like that at all.