Take-Two announces acquisition of mobile games giant Zynga for $12.7bn

Grand Theft Auto parent Take-Two has announced its intention to acquire mobile games giant Zynga in a deal worth $12.7 billion – the biggest ever in the games industry.

The deal will see the combination of Take-Two’s blockbuster console and PC franchises including GTA, Borderlands, NBA 2K and BioShock, with Zynga’s hugely popular social gaming brands including FarmVille and Words With Friends.

In a statement, Take-Two said the acquisition would establish it as “one of the largest and most diversified mobile game publishers in the industry”. Zynga has more than 183 million monthly active users playing its mobile games.

The company said Zynga’s expertise could help it drive its free-to-play and cross-platform ambitions, and help it bring Take-Two’s console/PC properties to mobile and add new game modes.

Following the acquisition, Frank Gibeau will continue to serve as chairman and CEO of Zynga, while the management team of Take-Two will lead the combined company.

Zynga will oversee Take-Two’s own mobile efforts going forwards, including the T2 Mobile Games business, which will operate under the Zynga brand as its own label within the company.

Take-Two’s existing mobile offerings include Dragon City, Monster Legends, Top Eleven, Two Dots, and WWE SuperCard.

The Zynga deal represents the biggest acquisition ever in the games industry, eclipsing Tencent‘s investment in SuperCell ($8.6bn) and Microsoft’s buyout of Bethesda ($8.1bn).

Take-Two will acquire all of the outstanding shares of Zynga in a cash and stock transaction valued at $9.861 per Zynga share, with a total enterprise value of approximately $12.7 billion.

Under the terms of the agreement, Zynga stockholders will receive $3.50 in cash and $6.361 in shares of Take-Two common stock.

Thanks to the deal, Take-Two said it expects mobile to comprise over 50% of its net bookings in its fiscal year 2023, as compared to an estimated 12% in FY 2022.

“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 Strauss Zelnick, chairman and CEO of Take-Two.

“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.”

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.

“I am proud of our team’s hard work to deliver a strong finish to 2021, with one of the best performances in Zynga’s history. We are incredibly excited to have found a partner in Take-Two that shares our commitment to investing in our players, amplifying our creative culture, and generating more value for stockholders.

“With this transformative transaction, we begin a new journey which will allow us to create even better games, reach larger audiences and achieve significant growth as a leader in the next era of gaming.”

The games industry’s pandemic boost has seen a significant rise in mergers and acquisitions.

According to research by InvestGame, the value of M&As in the games industry exceeded $52 billion in the first three quarters of 2021. Key acquirers in 2021 were Sony, Electronic Arts, Tencent and Embracer Group.

That represents a 2.5x increase on the $22 billion spent in 2020 – which was the biggest year since 2016 – which included the sales of ZeniMax to Microsoft and Codemasters to EA. The key acquirers in 2020 were Tencent, Embracer Group, Stillfront and Zynga.

The report noted that because video games have outperformed many industries hurt by the pandemic, public and private investors have started to target the industry as a perceived safe bet.