Take-Two Interactive Acquires Zynga For 12.7 Billion USD, Much To Investors Chagrin

The company is looking at bringing its most popular IPs to mobile with Zynga's expertise

by W

in All, Industry, News

Reading Time: 2 mins read

Take-Two Interactive, the publisher behind games like GTA V and the Borderlands series has acquired Farmville developer Zynga, though investors don’t seem to be taking it well.

Take-Two paid a total of 12.7 billion USD for Zynga, in a cash-and-stock deal that sees one of the biggest casual game developers added to Take-Two’s rolodex of talents. The acquisition represents the largest in the industry yet.

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It looks like a big part of this purchase was to make mobile games based off of various Take-Two properties, as they mentioned in their press release:

“Take-Two has an extensive catalog of commercially and critically successful console and PC titles with engaged and loyal communities of players, and there is a meaningful opportunity to create mobile games and new cross-platform experiences for many of these properties”, the press release reads.

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“We believe we have the best collection of console and PC intellectual property in the interactive entertainment business, and it’s basically nearly entirely unexploited for mobile and free-to-play around the world,” Take-Two Chief Executive Strauss Zelnick said in a conference call. “Zynga’s best-in-class studios can help us develop that property.”

Despite this, it looks like shareholders in Take-Two aren’t exactly playing ball with the Zynga acquisiton.

Take-Two’s share price has taken a bit of a tumble since the news was announced last night, closing at 13.3% down with its worst at 14% down. Meanwhile stock in Zynga soared, with the share prices up 45% thanks to the new parent company.

“It’s a no-brainer for Take-Two to get franchises like GTA and Red Dead on mobile”, says Bloomberg reporter Jason Schreier. “A free-to-play iOS version of GTA Online will make kajillions, and Zynga‘s got the expertise to develop that. But Take-Two is years late and spent way too much, which may explain market negativity”.

Take-Two’s share problems are likely a reaction to the price of the merger- 12.7 billion is a lot for any company, even one as storied as Zynga.

“It is a big price tag for a company that has not consistently produced profits or new blockbusters,” said Erik Gordon, professor at Ross School of Business, University of Michigan via Reuters.