Why did Take-Two Interactive buy Zynga for $12.7B?
The Hustle

Why did Take-Two Interactive buy Zynga for $12.7B?

The acquisition will give the combined company 1B+ users, and a strong position in the $180B+ gaming industry.

You will be hard-pressed to find more opposite games than “FarmVille” and “Grand Theft Auto” (GTA).

The former involves managing farm crops with your friends. The latter is a sandbox action game blamed for inspiring real-world carjackings.

Both games will now be under one roof

According to The Wall Street Journal, Two-Take Interactive (the $17B game studio behind GTA) will buy Zynga (FarmVille maker) for $12.7B in a cash-stock deal.

Why? Because — like the aforementioned games — opposites attract.

Take-Two creates dominant PC and console franchises, including “Red Dead Redemption” and “NBA 2K.” Meanwhile, Zynga — which launched on Facebook in 2007 — is a huge mobile player, including the popular “Words With Friends.”

The merged company will have 1B+ users…

… and be well positioned to gain share in a gaming industry that notched ~$180B in sales last year, per WSJ.

There are 3 notable opportunities moving forward:

Take-Two is paying…

… a ~64% premium on Zynga’s stock price. It may be an overpay, but the deal is on trend with recent gaming acquisitions:

Zynga founder and chairman Mark Pincus reflected on the deal by noting that his studio’s 1st Facebook game was poker.

It’s fitting that Zynga’s story is now bookended by a huge bet from Take-Two.

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