With Zynga acquisition, Take-Two boosts its mobile games business

William Huston, AIF®, AIFA®

by in Published on January 10, 2022
With Zynga acquisition, Take-Two boosts its mobile games business

**With Zynga acquisition, Take-Two boosts its mobile games business **

Video game publisher Take-Two Interactive Software announced plans Monday to buy Zynga in a deal worth $12.7 billion in cash and stock. Zynga's stock prices rose on the news, but TTWO fell.

Take-Two said the deal will boost its mobile gaming business, the fastest-growing segment of the interactive entertainment industry.

New York-based Take-Two is best known for its PC and console game franchises, such as Grand Theft Auto, Red Dead Redemption and NBA 2K. San Francisco-based Zynga makes mobile games such as "Empires & Puzzles," "Merge Dragons," "Words With Friends" and "Zynga Poker."

Take-Two will pay a total value of $9.86 per share to Zynga, including $3.50 in cash and $6.36 in TTWO stock. This transaction is 64% above Zynga's closing price on Friday.

The deal is called the "strategic combination"

"This strategic combination combines the best in PC and console franchises with a diverse and pioneering mobile publishing platform. The marketplace has a rich history of innovation and creativity," said Strauss Zelnick, CEO of Take-Two. press release.

Expect $100 million in annual synergistic costs for the first two years after closing. The companies expect the deal to close in the first quarter of Take-Two's 2023 fiscal year, which ends June 30, 2022.

TTWO shares fall, Zynga rises

In stock trading this morning, Zynga shares were up 45% at 8.70. Meanwhile, TTWO shares were down 13.4% to 142.56.

TTWO and other video game stocks rose in the first four quarters of the Covid-19 pandemic. Consumers have been spending more on on-demand home entertainment amid the coronavirus crisis. But sales slowed as the economy reopened thanks to the availability of a Covid vaccine.

Computer software and games group IBD ranked 179 out of 197, followed by IBD. TTWO stock ranks fifth out of 21 in the group, according to an IBD stock review. It has an IBD composite rating of 47 out of 99. IBD's composite rating is a combination of key fundamental and technical indicators to help investors assess the strengths of stocks. The best growth stocks have composite ratings of 90 or higher.

Competitive mobile gaming market

The growth of mobile gaming has attracted many new entrants, from startups to companies such as Netflix Internet Television Network (NFLX) and Snap Social Platform (SNAP).

Traditional game publishers have increased their portfolios by acquiring mobile game makers. For example, Activision Blizzard (ATVI) bought King Digital Entertainment in 2016 and Electronic Arts (EA) bought Glu Mobile in April 2021.

TTWO shares hit an all-time high of 214.91 on February 8, 2019. 2021. It is working on Trading consolidation for the past 11 years. Month.

SOURCE

Seitz, P. (2022, January 10). Take-Two To Bolster Mobile Game Business With Zynga Acquisition. Investor’s Business Daily. Retrieved January 10, 2022, from https://www.investors.com/news/technology/ttwo-stock-take-two-to-buy-zynga-in-video-game-merger/?src=A00220

William Huston, AIF®, AIFA®
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