Take-Two Buys Zynga in $11B Mobile Play

Grand Theft Auto maker Take-Two Interactive said Monday it had agreed to acquire Zynga for about $11 billion in a blockbuster move to grab a big chunk of the fast-growing mobile gaming market.

The deal will give Take-Two access to Zynga titles including the best-selling Farmville series. But according to The Verge, “perhaps more importantly, Take-Two will now be able to use Zynga’s expertise building hugely popular free-to-play mobile titles so it can make new hit games based on its own properties.”

Under the terms of the cash-and-stock deal, Zynga stockholders would receive $9.86 for each share they own, a 64% premium over the closing stock price on Friday.

Citing its extensive catalog of successful console and PC titles, Take-Two said there is “a meaningful opportunity to create mobile games and new cross-platform experiences for many of these properties.”

“Zynga’s nearly 3,000 employees include highly talented mobile developers, paving the way for Take-Two to accelerate this strategic initiative and introduce its iconic intellectual properties across the fastest-growing platform in the industry,” it added.

Mobile is the fastest-growing segment in gaming, with an estimated $136 billion in gross bookings in 2021, and an expected compound annual growth rate of 8% over the next three years.

Other developers have been eyeing mobile, including Microsoft, which bought Bethesda, the company behind the Fallout and The Elder Scrolls franchises, for $7.5 billion in 2020.

Take-Two’s mobile offerings already include popular games such as Dragon City, Monster Legends, and Two Dots. But Grand Theft Auto III, Vice City, and San Andreas are currently available only as “paid titles on the iOS App Store and likely aren’t nearly as lucrative as some of the huge free-to-play hits on the market right now,” The Verge said.

Take-Two said that with the Zynga acquisition, it expects mobile to account for more than 50% of its net bookings in fiscal 2023, compared with an estimated 12% in 2022.

“Take-Two should see an acceleration of its mobile business, including taking existing brands and turning them into mobile franchises,” Michael Pachter, managing director of equity research at Wedbush Securities, told CNBC.