The stock of Zynga Inc. (ZNGA) soared in the pre-market after the company announced its merger with take-two in a press release. The stock of ZNGA was valued at $9.08 in the pre-market gaining more than 51% from the previously closed value. At the end of the last trading session, the stock of ZNGA closed at $6.00. The volume of the stock traded in the last trading session was around 19.55 million shares.
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Reason of the ZNGA stock gain
Zynga Inc. (ZNGA) announced in a press release that Take-Two Interactive (TTWO) will acquire all the outstanding shares if Zynga. According to the agreement, the stockholders of Zynga will receive $3.50 in cash and $6.361 in shares of Take-Two common stock for each share of Zynga common stock outstanding at the closing. The purchase is valued at $9.861 per share of Zynga common stock based on the closing price of the stock in the market on January 7, 2022. The total value of the corporation is approximately $12.7 billion. The purchase signifies a 64% premium to Zynga’s closing share price on January 7, 2022.
This acquisition unifies two global leaders in the interactive entertainment business and designates Take-Two as one of the biggest and most diversified mobile game publishers in the gaming industry. TTWO has $6.1 billion in Pro-forma Net Bookings for the trailing twelve-month (TTM) period ended Sep 30, 2021.
The merger unifies two highly complementary businesses. Take-Two is the biggest player in the best-in-class portfolio of console and PC games, while Zynga has a portfolio of industry-leading mobile franchises. The two companies have created and expanded iconic franchises, which will unite to initiate one of the biggest and most diverse portfolios of intellectual properties in the industry. Take-Two is anticipating that the Transaction is expected to deliver roughly $100 million of annual cost synergies within the first two years after closing, and more than $500 million of annual Net Bookings prospects in the near future.
Effect on the stock gain
As soon as the news hit the market, the stock of the ZNGA gained more than 50% in the pre-market. The acquisition will make TTWO the biggest player having a diversified portfolio in the gaming industry. The stock of ZNGA may increase further after the acquisition.
Conclusion
Both the companies are the two players in the gaming industry; TTW is a giant in the PC and console having games like GTA and Red Dead Redemption under its belt. While ZNGA has a big market in mobile gaming owning games like FarmVille, CSR Racing, and many more. The acquisition of ZNGA by TTWO will significantly increase its revenue and ultimately increase its stock value.
