Breakingviews - Take-Two pays hefty premium for mobile experiment
, including debt, the companies said on Monday. That’s a 64% premium compared to Zynga’s undisturbed stock price. It’s a hefty payout for the promise of expanding its mobile toehold.
Take-Two made a name for itself selling games on traditional consoles before mobile gaming was a twinkle in players’ eyes. This business is not the same as capturing gamers on their handheld devices. Mobile players tend to be more casual, popping in and out rather than playing for long stretches. For Take-Two, the acquisition is an admission it would struggle to replicate Zynga’s expertise in acquiring customers through data and selling advertising.
There is some strategic logic to the deal, which will pay Zynga shareholders $9.86 in cash and stock. The acquisition should even out Take-Two’s business where the introduction of big sequels makes revenue lumpy. And Zynga won’t have to pay to develop limited versions of say, “Red Dead Redemption,” where fans might be itching for something simple to play on the go. But the market for software engineers is hot, and perhaps some of Zynga’s employees might walk after a buyout.
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