December 9, 2022

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Take-Two Interactive to buy FarmVille Maker Zynga on a $ 11 billion deal

Take-to-Interactive Software Inc.

TTWO -14.19%

Agreed to buy

Zinga Inc.

ZNGA 42.17%

The maker of Grand Theft Auto is expanding its mobile portfolio with successes such as Words with Friends and Formville on a roughly $ 11 billion deal.

The cash and stock deal announced on Monday is one of the biggest acquisitions in the video game industry. Strauss-Kahn, CEO of Take-Too, said the acquisition of Zinga would give it a strong foothold in mobile, which has been the fastest growing segment of the global video game industry in recent years.

“More than 50% of our net bookings come from mobile once this transaction is completed,” he said. Zelnik said in an interview with The Wall Street Journal. The integrated company will have more than one billion users, creating the opportunity to promote the content to a wider audience.

Under the cash and stock agreement, Zynga shareholders will receive $ 9.86 per share they own, including $ 3.50 in cash and $ 6.36 in take-to-stock. After adjusting Zynga’s convertible shares, cash and debt, companies said the deal was worth $ 12.7 billion.

The deal is expected to close in the middle of the year, with Zinga’s share price at 64% premium until the end of Friday. Shares of Zinga were up 42% at $ 8.49 in Monday afternoon trading, while Take-Two was down 16% at $ 138.89.

“While one never wants to be brave about a fall in their share price, we are determined by our share price,” he said. Zelnik said. “We always take the view that we’ve been playing for a long time.”

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Take-Two is best known for its computer and console game rights such as Grand Theft Auto and NBA 2K. Launched in 2013, “Grand Theft Auto V” is one of the best-selling video games of all time. It has sold more than 155 million units worldwide, according to company data.

In recent years, take-to-studios have expanded into mobile games with the acquisition of Plato, Social Point and Nordius. Although Zynga is starting to develop browser based games

Facebook,

Then it focused on mobile games. Today, its portfolio includes hits like “CSR Racing” and “Ginga Poker”.

Mr. Zelnik said that an attractive part of Zinga has its own advertising site. Since most people rely on third parties, it is rare for game makers to have such a site at home.

The company was successful as Zynga shares plummeted late last summer

Apple Inc.

New Privacy Rules Makes it difficult to track users For the purpose of selling targeted ads. Jinga also said More audience less than expected Because of the relaxation of infection controls.

Recently, however, the company has shown signs of rebounding. In November, Zynga recorded third-quarter records and reduced its losses as advertising sales nearly doubled. The company said at the time it expects full-year revenue of $ 2.78 billion and net bookings of $ 2.81 billion, unchanged from the previous quarter.

Take-Doo’s most recent earnings report, released in November, was for the second quarter of its fiscal year and showed a modest increase in revenue and net bookings. At the time, the company had raised its outlook for the full fiscal year ending March, saying it expected $ 3.35 billion to $ 3.45 billion and net bookings of $ 3.3 billion to $ 3.4 billion.

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In a call with investigators, Mr. Zelnik said today that he has avoided metawares, one of the buzzing words in the video game space.

In an interview with the Journal, he said, “This is a word we have dropped today.” But he said both Take-Do and Jinga are looking at opportunities with related technologies Such as fungal tokens, Or NFTs.

“I think both teams are focused on what Web 3.0 will bring,” he said. The next evolution of the Internet.

A technology industry in metawares takes the form of war. WSJ Technology Correspondent Megan Poprovsky explains that technology companies such as Facebook, Roblox and Epic Games are investing billions to create this digital space. Photo: Story volumes

Mr Zynga said the mobile-games segment would be rolled out in Zynga and would continue to operate independently like Rockstar Games and its other units, such as 2K. Zelnik said. He said Zinga could build mobile games based on take-two consoles and computer franchises such as Red Dead Redemption and Borderlands.

“Bringing our key intellectual attributes to the mobile business is one of the key opportunities in many cases for the first time,” Mr. Zelnik said.

He also said that Take-Do had been in a relationship with Jinga’s management team for some time. Mr. Zelnik said he appreciates Tag-to-Zinga’s free-to-play business model, which allows players to download for free, but with the option of spending money on virtual goods.

Global video game industry Was one of the big beneficiaries According to Newzoo BV estimates that social-distance control of epidemics, consumer spending on game software will increase by about 23% in 2020 over the previous year. Last year, that growth shrank to about 1.4%, bringing the total to about $ 180 billion, according to analysts.

Consumer spending on mobile games has been particularly strong in recent years, surpassing spending on console and computer games.

Deal activity is also high in the video game sector, which grossed $ 180.3 billion in global consumer spending last year, according to analytics firm Newsu PV. Last year,

Microsoft Corp.

Doom video game owner bought for $ 7.5 billion Its biggest game acquisition. Last year, too,

Electronic Arts Inc.

Acquired Glu Mobile Inc. For $ 2.4 billion And Platemic Limited. For $ 1.4 billion.

Notably, EA acquired Codemasters Group Holdings for $ 1.2 billion last February after the take-off. First the company took the bid, Which is named after the Formula One auto-racing series.

Zinga, which has bought studios such as Rollick and Starlark, has grown by contract in recent years. The company acquired Chartbust, a mobile advertising and monetization site, in May for about $ 250 million.

According to Censor Tower Inc. estimates that last year, Zinga’s “Toon Blast” mobile game became its highest-grossing spear, amassing more than $ 415 million in player costs, and in 2020 Zynga acquired Istanbul-based Peak’s Toon Blast maker. $ 1.8 billion.

MKM analyst Eric Handler said the deal between Take-Two and Zynga would benefit both companies, citing the latter as one of his best stock options for 2022.

Write to Sarah e at [email protected] Needleman

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