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Take-Two, led by chairman and CEO Strauss Zelnick, will acquire all of the outstanding shares of Zynga in a cash and stock transaction valued at $9.861 per Zynga share, based on the market close as of Friday, “with a total enterprise value of approximately $12.7 billion.” The purchase price represents a premium of 64 percent to Zynga’s closing share price on Friday, the companies said.
Take-Two’s labels are home to some of the most popular gaming series, including Grand Theft Auto, Red Dead Redemption, NBA 2K, BioShock, Borderlands, Civilization and Mafia, while Zynga’s portfolio includes such titles as CSR Racing, Empires & Puzzles, FarmVille, Golf Rival, Harry Potter: Puzzles & Spells, Words With Friends and Zynga Poker.
Take-Two said its “extensive catalog of commercially and critically successful console and PC titles with engaged and loyal communities of players” will provide “a meaningful opportunity to create mobile games and new cross-platform experiences for many of these properties.”
Calling the deal a “transformative combination,” they said it will bring together “two global leaders in the interactive entertainment business and establishes Take-Two as one of the largest and most diversified mobile game publishers in the industry, with $6.1 billion in pro-forma net bookings for the trailing 12-month period ended Sept. 30.”
The transaction is expected to be completed during the quarter ending June 30 and is subject to the approval of both companies’ stockholders and regulatory approvals.
“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 Zelnick. “This strategic combination brings together our best-in-class console and PC franchises, with a market-leading, diversified mobile publishing platform that has a rich history of innovation and creativity. Zynga also has a highly talented and deeply experienced team, and we look forward to welcoming them into the Take-Two family in the coming months.”
He added: “As we combine our complementary businesses and operate at a much larger scale, we believe that we will deliver significant value to both sets of stockholders, including $100 million of annual cost synergies within the first two years post-closing and at least $500 million of annual net bookings opportunities over time.”
Frank Gibeau, CEO of Zynga, added: “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.”
Gibeau and Zynga’s president of publishing, Bernard Kim, will “drive the strategic direction for Take-Two’s mobile efforts and will oversee the integration and day-to-day operations of the combined Zynga and T2 Mobile Games business, which will operate under the Zynga brand as its own label within the company,” Take-Two said.
J.P. Morgan and LionTree Advisors are serving as financial advisors to Take-Two, with Willkie Farr & Gallagher serving as legal counsel. Goldman Sachs is acting as financial advisor to Zynga, with Wilson Sonsini serving as legal counsel.
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