By Kuldip K. Ambastha
On Monday, January 10, 2022, Take-Two Interactive Software, Inc. (TTWO) shares dropped by -13.1% for the trading day, while Zynga Inc. (ZNGA) shares increased by +40.7% instead. Take-Two Interactive will be buying Zynga at a 64% premium, for $12.7 billion. Take-Two Interactive is well-known for the console-based Grand Theft Auto series of videogames, while Zynga is well-known for mobile gaming franchise titles such as Words With Friends. By acquiring Zynga, Take-Two Interactive may be making a proactive effort to enter into the mobile gaming sector. Also, Take-Two Interactive may be better able to enter into emerging market countries, using a free to play (F2P) model, after having acquired Zynga. Once the acquisition closes, Take-Two Interactive will have approximately 8,000 game developers on its payroll.
Zynga will be expected to operate as an autonomous label within Take-Two Interactive, and will continue to be led by CEO Frank Gibeau. Furthermore, Zynga will have two seats on Take-Two Interactive’s board, while Strauss Zelnick will continue to be the CEO of Take-Two Interactive. On Monday, January 10, 2022, the stock price of the acquirer (Take-Two Interactive) dropped, while the stock price of the acquiree (Zynga) increased. This may be implying that investors are skeptical of Take-Two Interactive’s potential acquisition activity, while at the same time Zynga being bought out at a premium means its stock price increased. Only time will tell if a combination of Take-Two Interactive and Zynga will ultimately reward long-term investors, but for now at the least this deal is the largest ever acquisition seen in the videogaming sector.
Keywords – Take-Two Interactive Software, Inc., Take-Two Interactive Software, Take-Two Interactive, Take-Two, TTWO, Zynga Inc., Zynga, ZNGA, Grand Theft Auto, Words With Friends, videogaming.
Disclosure – The principals of Ambastha Financial LLC have a short option position in TTWO and no position in ZNGA. The clients of Ambastha Financial LLC have no positions in TTWO or ZNGA.
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