Why did Zynga (ZNGA) stock soar 41% in a day?

3 min read | January 11, 2022 03:08 AM EST | By Shreya Biswas

Why did Zynga (ZNGA) stock soar 41% in a day? — Image source: © 2022 Kalkine Media®

Take-Two Interactive - Zynga Inc acquisition deal

Zynga Inc is a global mobile gaming company known for creating famous online interactive games such as FarmVille™.

Also read: 3 Canadian online gaming stocks worth exploring

Take-Two Interactive, also a leading video gaming company, said on Monday that it is buying Zynga for a total enterprise value of US$ 12.7 billion.

Two Interactive - Zynga Inc acquisition deal

The deal is set to see Take-Two Interactive purchase all of Zynga’s outstanding shares for a price of US$ 9.86 per piece, which is a premium of about 64 per cent to Zynga’s closing price of US$ 6 on Friday, January 7.

As a part of this transaction, Zynga shareholders, the official statement said, will be entitled to US$ 3.5 in cash and US$ 6.36 in Take-Two Interactive stock in exchange of each Zynga share.

The New York-based gaming company said that it has received a committed financing of US$ 2.7 billion from financial services giant JPMorgan for the transaction. The rest, the company added, is set to be funded by cash from its balance sheet and proceeds from a new debt issuance.

Following the necessary regulatory and shareholder approvals, Zynga and Take-Two Interactive’s acquisition deal is likely to close by June 30 this year.

Also read: 5 best Canadian game stocks for millennials to buy

Bottomline

Following the announcement of this deal, Zynga Inc saw its stock price rocket by about 41 per cent to close at a price of US$ 8.44 per share on Monday.

However, Take-Two Interactive stocks shrank by over 13 per cent to a value of US$ 142.9 per piece on Monday.

Zynga Inc and its online games had reportedly noted quite a surge in their demand amid the COVID-19 pandemic’s stay-at-home trends. However, the San Francisco-based firm’s stock price declined by about 38 per cent in the past year.

This transaction between the two mobile gaming enterprises comes at a time when the longevity of the pandemic-triggered gaming boom is being questioned by many.

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