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Zynga's San Francisco headquarters. Photo by Bloomberg.
The Briefing
Venture Capital Markets

Zynga Deal Signals M&A Wave to Come

By  |  Jan. 10, 2022 5:00 PM PST
Photo: Zynga's San Francisco headquarters. Photo by Bloomberg.

Looking for a bargain? Try the tech and media aisles of your local stock market. With lots of fast-growing stocks down 60% from their 2021 highs, acquisitions are likely to come back into vogue. We got a glimpse of what’s to come today with Take-Two Interactive Software’s $12.7 billion proposed acquisition of mobile gaming outfit Zynga. The announced price of $9.86 a share is 64% above where Zynga was trading on Friday—but still below Zynga’s highs last February of between $11 and $12. 

You can chalk up Zynga’s recent stock slump partly to investor anxiety about the potential impact of Apple’s ad-tracking changes on Zynga’s fast-growing ad business. Another factor, though, is surely the downward revaluation of many tech firms. Whatever the reason, Take-Two is getting Zynga for a decent price, at least from the perspective of its shareholders. The $12.7 billion value is four times Zynga’s expected 2022 revenue, based on data from S&P Global Market Intelligence. That’s roughly where Take-Two itself is trading and a little below the equivalent multiples for gaming giants Electronic Arts and Activision. 

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