Take-Two Interactive Software’s Recent Acquisition of Zynga
In January 2022, Take-Two Interactive Software, Inc. (NASDAQ: TTWO) announced the $12.7 Billion acquisition of Zynga Inc., the developer of mobile and video games. Zynga is one of the most recognizable names in the video game industry and is known for developing games such as Grand Theft Auto, Red Dead Redemption, FarmVille, and Words with Friends. This historic deal marked the biggest acquisition in video game history at the time, trumping Microsoft’s acquisition of Elder Scrolls. Since then, however, Microsoft has recently announced plans to acquire Activision Blizzard for a whopping $68.7 Billion all-cash deal. In this acquisition, Goldman Sachs advised Zynga, while JPMorgan and Liontree advised Take-Two.
This deal represents a large consolidation in the video game industry as Take-Two Interactive was already the owner of legacy game makers 2K and Rockstar Games. This acquisition further solidified Take-Two’s position as an industry leader and thrust it to the forefront as they turned their focus to mobile gaming.
This deal is significant because mobile gaming is currently the fastest growing vertical within the video game industry, accounting for over 50% of all sales currently. This acquisition marks a much-needed foray by Take-Two into mobile gaming. However, they are not the first to do this either. Both Activision Blizzard and EA have both been acquiring mobile game studios including Activision Blizzard’s acquisition of King and EA’s acquisition of Playdemic. Many industry leaders speculate that this latest acquisition of Zynga by Take-Two will help them accelerate taking their legacy console games mobile as traditional console gaming falls by the wayside.
Take-Two will officially buy Zynga for approximately $9.861 per share. Following the announcement of the acquisition, Zynga shares jumped over 50%, while Take-Two’s shares plunged approximately 8% to around $151, indicating investor fears about the acquisition. In an increasingly mobile world, the acquisition signifies the legacy game maker’s willingness to adapt in order to keep up with changing trends in the industry.
