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Take-Two Acquiring Zynga, Adding Mobile Games to Grand Theft Auto Empire

Explosion in Cell Phone Gaming Driving Take-Two’s Acquisition

Take-Two Interactive Software (TTWO) will buy Zynga (ZNGA) for upwards of $11 billion in one of the video game industry’s largest-ever acquisition deals. Analysts consider this part of Take-Two’s push into cell phone gaming, as Zynga owns “Words With Friends” and “FarmVille.” Take-Two’s biggest money makers are the Grand Theft Auto and NBA 2K franchises, but the company has pushed into mobile gaming in recent years.

The purchase price represents around a 64% premium over Zynga’s closing stock price on Friday of last week. Following easing pandemic-related restrictions and changes to Apple’s (AAPL) app store regulations, Zynga’s stock had dipped back in August. Still, industry analysts note mobile gaming sales outpace combined figures for both computer and console games in recent years.

Video Game Companies Want In on Mobile Gaming’s Potential

Mobile gaming’s growth cooled off a bit as lockdowns ended, but the industry as a whole continues to show progress. Evidence also exists that cell phone gaming is stabilizing following that volatile period, with Zynga posting record bookings in Q3 2021 and nearly doubling advertising sales. In general, the video game sector has seen a high volume of deal-making activity.

Microsoft (MSFT) made its largest games acquisition to date last year, purchasing the Doom franchise for $7.5 billion. Electronic Arts (EA) also spent a combined $5 billion in 2021 to acquire three game makers. This all occurred during a year in which the video game sector generated $180.3 billion in global consumer spending.

Take-Two Hoping Deal Lifts Company to New Mobile Gaming Heights

Take-Two executives say this acquisition drives diversification as the company pushes into mobile gaming. For Zynga, analysts expect opportunities for previously established mobile games to flourish on non-mobile platforms. In fact, Zynga’s stock price soared upon news of the deal, with shares up 45% during early Monday trading.

These types of transactions have spurred Zynga’s growth in recent years, given previous deals involving several smaller studios. The San Francisco-based company also acquired Chartboost, a mobile advertising and monetization platform aiming to improve ad-targeting capabilities. The growth in mobile gaming is something traditional video game companies want in on. In lockstep with this philosophy, Take-Two hopes Zynga will help transform the firm into a major player in the space.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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