Take-Two Zynga

Take-Two Interactive (NASDAQ: TTWO) announced it has completed its acquisition of mobile game developer Zynga.  The deal was announced in January 2022 and valued Zynga at over $12 billion.

Analysis

Zynga was an original pioneer of social games on Facebook.  The 2011 Zynga IPO was highly hyped.  At the time, DFC Intelligence was a critic of the high valuation.  However, Zynga had clearly improved in recent years as it moved to mobile platforms.

Nevertheless, after 10 years Zynga sold for less than its IPO price (when considering additional purchases).  The question now is whether the company can be integrated into Take-Two. DFC has some concerns.

Like many AAA publishers, Take-Two has long wanted to get into the mobile business.  After trying to develop mobile divisions internally, Take-Two has followed competitors Electronic Arts and Activision Blizzard by buying their way in. 

Neither EA nor Activision were able to get significant synergy from their mobile acquisitions.  However, Activision’s acquisition of King was clearly a key driver of Microsoft’s bid to buy the company for a record $69 billion (announced a week after the Take-Two/Zynga deal).  It will be interesting to watch how Zynga and if Zynga is integrated into the core of Take-Two.

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