Take-Two Interactive, maker of Grand Theft Auto and Red Dead Redemption, will acquire Zynga, maker of FarmVille and Words With Friends, in a deal valued at about $12.7 billion in cash and stock.
The purchase announced Monday would unite a console gaming powerhouse, Take-Two, with a mobile gaming company with a near-cult following.
Zynga shareholders will receive $3.50 in cash and $6.36 in Take-Two common stock for each Zynga share outstanding at closing. The transaction is valued at $9.86 per Zynga common share.
“This strategic combination brings together our best-in-class console and PC franchises with a market-leading, diversified mobile publishing platform that has a rich history of innovation and creativity,” said Take-Two Chairman and CEO, Strauss Zelnick, in a statement. He will retain those roles when the two companies merge.
Take-Two anticipates the deal will help bring mobile versions of some of its games to consoles and PCs.
Take-Two said Monday that it expects to save approximately $100 million in annual costs in the first two years after the transaction is complete.
Zynga CEO Frank Gibeau and Editorial Chairman Bernard Kim will oversee the integration and day-to-day operations of the combined Zynga and T2 Mobile Games business, which will operate under the Zynga brand as its own label within Take-Two.
Take-Two will also expand its board of directors to 10 members at closing, adding two Zynga board members.
The transaction includes a “go-shop” provision that gives Zynga 45 days to hear alternative proposals.
The deal is expected to close during the first quarter of Take-Two’s fiscal year 2023, which ends June 30. It still requires approval from Take-Two and Zynga shareholders. It has already received approval from the boards of both companies.
Shares of San Francisco-based Zynga Inc. rose 52.5% to $9.15. Those of New York-based Take-Two Interactive Software, Inc. fell 8.7% to $150.25.
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