Take-Two Interactive buys Zynga in $12.7 billion deal

Take-Two Interactive, maker of Grand Theft Auto and Red Dead Redemption, is buying Zynga, maker of FarmVille and Words With Friends, in a cash-and-stock deal with an enterprise value of about $12.7 billion.

Zynga shareholders will receive $3.50 in cash and $6.36 in shares of Take-Two common stock for each share of Zynga outstanding stock at closing.

Take-Two said Monday it anticipates $100 million in annual cost savings. The company's other popular games include BioShock, Borderlands and NBA 2K. Zynga's titles also include CSR Racing, Harry Potter: Puzzles & Spells and Toon Blast. 

"The existing Zynga portfolio contains a broad array of long-lived titles, and the potential synergies from a deal on [Take=Two's] operations have the potential to be significant," Andrew Marok, an analyst with Raymond James said in a report, adding that Take-Two "instantly becomes a major mobile player" with the transaction.

"Mobile remains the largest and fastest-growing platform in gaming, and this deal shows how serious" Take-Two is in pushing into the space, Marok said.

The deal is expected to close during the first quarter of Take-Two's fiscal 2023, ending June 30. It still needs approval of both Take-Two and Zynga stockholders.

Shares of Zynga, based in San Francisco, jumped 52% to $9.14. Shares of Take-Two Interactive Software, based in New York City, fell more than 8% to $150.66.

"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," Zynga CEO Frank Gibeau said in a statement. 

Take-Two chief executive Strauss Zelnick will continue to serve as CEO after the purchase is complete.