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NBA 2K, GTA Owner Drops Billions on Mobile Game Giant Zynga

Take-Two Interactive is acquiring the company behind Farmville and Words with Friends in a blockbuster deal worth 11 figures in cash and stock.

Video game conglomerate Take-Two Interactive, which operates the brands that produce the successful Grand Theft Auto and NBA 2K franchises, made a huge investment in the world of mobile gaming on Monday, announcing the acquisition of mobile game behemoth Zynga for $12.7 billion.

First leaping to popularity in 2009 when its Facebook-based game Farmville became a viral sensation, Zynga continued to acquire and develop mobile hits like Words With Friends, Empires & Puzzles, and Toon Blast, and even engaged in game licensing deals with franchises varying from Star Wars to Harry Potter to Game of Thrones to The Wizard of Oz.

The company went public on the NASDAQ in late 2011, but has seen its share price fall nearly 40% over the last year amid doubts that the company’s growth during the quarantine period of the COVID-19 pandemic was sustainable in the long run. Now, they’ve hit the reset button with Take-Two — and the future possibilities are dazzling.

Take-Two Interactive, the holding company that owns top video game labels 2K (NBA 2K, BioShock, Borderlands) and Rockstar Games (Grand Theft Auto, Red Dead Redemption) sees an opportunity to leverage Zynga in bringing its iconic series to consumers’ mobile devices in addition to their traditional gaming consoles and PCs.

Mobile gaming accounts for roughly 10% of Take-Two’s global business, and that will only grow with this Zynga deal.

JP Morgan and LionTree Advisors are serving as financial advisors to Take-Two, with the former reportedly funding $2.7 billion of the deal.

“We are thrilled to announce our transformative transaction with Zynga, which significantly diversifies our business and establishes our leadership position in mobile, the fastest-growing segment of the interactive entertainment industry,” said Strauss Zelnick, Take-Two’s chairman and CEO. “Zynga also has a highly talented and deeply experienced team, and we look forward to welcoming them into the Take-Two family in the coming months. As we combine our complementary businesses and operate at a much larger scale, we believe that we will deliver significant value to both sets of stockholders, including $100 million of annual cost synergies within the first two years post-closing and at least $500 million of annual Net Bookings opportunities over time.”

Added Zynga CEO Frank Gibeau:

“Combining Zynga’s expertise in mobile and next-generation platforms with Take-Two’s best-in-class capabilities and intellectual property will enable us to further advance our mission to connect the world through games while achieving significant growth and synergies together. I am proud of our team’s hard work to deliver a strong finish to 2021, with one of the best performances in Zynga’s history. We are incredibly excited to have found a partner in Take-Two that shares our commitment to investing in our players, amplifying our creative culture, and generating more value for stockholders. With this transformative transaction, we begin a new journey which will allow us to create even better games, reach larger audiences, and achieve significant growth as a leader in the next era of gaming.”

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About The Author
Shlomo Sprung
Shlomo Sprung
Shlomo Sprung is a Senior Staff Writer at Boardroom. He has more than a decade of experience in journalism, with past work appearing in Forbes, MLB.com, Awful Announcing, and The Sporting News. He graduated from the Columbia University Graduate School of Journalism in 2011, and his Twitter and Spotify addictions are well under control. Just ask him.