Analyst Note| Neil Macker, CFA |
Take-Two announced an agreement on Jan. 10 to purchase Zynga, a mobile game publisher, in a deal valued at $12.7 billion, or $9.86 per share, based on Take-Two’s closing price on Jan. 7. The deal is for $3.50 in cash and $6.36 in equity depending on the closing price of Take-Two. The deal price represents a 64% premium to the unaffected price of Zynga and 20% below the 52-week high. Take-Two will fund the cash portion with cash on hand and a new debt offering. Due to the price collar, Take-Two shareholders will own between 67% and 70% of the combined company post-closing. Zynga does have a go-shop provision for 45 days, which could attract a higher bid.