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Take-Two and Zynga to Combine, Bringing Together Best-in-Class Intellectual Properties and a Market-Leading, Diversified Mobile Publishing Platform, to Enhance Positioning as a Global Leader in Interactive Entertainment

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Take-Two Interactive and Zynga, two leaders in interactive and mobile entertainment, today announced that they have entered into a definitive agreement, under which Take-Two will acquire all of the outstanding shares of Zynga in a cash and stock transaction valued at $9.861 per Zynga share, based on the market close as of January 7, 2022, with a total enterprise value of approximately $12.7 billion. Under the terms and subject to the conditions of the agreement, Zynga stockholders will receive $3.50 in cash and $6.361 in shares of Take-Two common stock for each share of Zynga common stock outstanding at the closing of the transaction. The purchase price represents a premium of 64% to Zynga’s closing share price on January 7, 2022.

This transformative combination unifies two global leaders in the interactive entertainment business and establishes Take-Two as one of the largest and most diversified mobile game publishers in the industry, with $6.1 billion in pro-forma Net Bookings for the trailing twelve-month period ended September 30, 2021.

Both companies have created and expanded iconic franchises, which will combine to form one of the largest and most diverse portfolios of intellectual properties in the sector. Take-Two’s labels are home to some of the most beloved series in the world, including Grand Theft Auto®, Red Dead Redemption®, Midnight Club®, NBA 2K®, BioShock®, Borderlands®, Civilization®Mafia®, and Kerbal Space Program®, while Zynga’s portfolio includes renowned titles, such as CSR Racing, FarmVille, Hair Challenge, High Heels! , Toon Blast, Words With Friends.

Management Comments

“We are thrilled to announce our transformative transaction with Zynga, which significantly diversifies our business and establishes our leadership position in mobile, the fastest growing segment of the interactive entertainment industry,” said Strauss Zelnick, Chairman and CEO of Take-Two. “This strategic combination brings together our best-in-class console and PC franchises, with a market-leading, diversified mobile publishing platform that has a rich history of innovation and creativity. Zynga also has a highly talented and deeply experienced team, and we look forward to welcoming them into the Take-Two family in the coming months. As we combine our complementary businesses and operate at a much larger scale, we believe that we will deliver significant value to both sets of stockholders, including $100 million of annual cost synergies within the first two years post-closing and at least $500 million of annual Net Bookings opportunities over time.”

“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,” said Frank Gibeau, CEO of Zynga. “I am proud of our team’s hard work to deliver a strong finish to 2021, with one of the best performances in Zynga’s history. We are incredibly excited to have found a partner in Take-Two that shares our commitment to investing in our players, amplifying our creative culture, and generating more value for stockholders. With this transformative transaction, we begin a new journey which will allow us to create even better games, reach larger audiences and achieve significant growth as a leader in the next era of gaming.”

Strategic Rationale and Stockholder Value Creation

With Zynga’s stockholders receiving approximately 64.5%1 of the transaction consideration in Take-Two stock, both groups of stockholders will benefit from the combined company’s greater scale, enhanced financial profile, and the synergies created through the transaction.

Combined company is well-positioned to capitalize on the interactive entertainment industry’s strong tailwinds, including a leadership position in mobile. The video game sector has experienced rapid growth over the last few years and is now the largest vertical in the entertainment industry2. Mobile gaming is the fastest growing segment within the industry, with an estimated $136 billion2 in gross bookings in 2021, and an expected compound annual growth rate of 8%2 over the next three years. The transaction is expected to establish Take-Two as a leader in mobile gaming, with mobile expected to comprise over 50% of its Net Bookings in Fiscal Year 2023 (as compared to an estimated 12% in Fiscal Year 2022). The transaction will bolster Take-Two’s mobile offerings, which include popular games such as Dragon City, Monster Legends, Top ElevenTwo Dots, and WWE SuperCard, and consist of a diverse array of titles that focus on many of the most popular genres in mobile gaming, including casual, hyper-casual, lifestyle, mid-core, puzzle, social casino and sports games.

Formation of an industry-leading portfolio, comprising Take-Two’s best-in-class intellectual properties and Zynga’s renowned mobile titles. The transaction will create a powerful and diverse portfolio of industry-leading titles that span key platforms and genres across interactive entertainment, developed by some of the most creative and forward-thinking talent within the industry. By sharing best practices and key data insights across the enterprise, the Company is expected to benefit from significant development and publishing synergies, unlock new revenue streams and reach new audiences around the world.

The combined entity has significantly greater scale, with $6.1 billion in Net Bookings, and $769 million3 in Adjusted Unrestricted Operating Cash Flow on a pro-forma basis for the trailing twelve-month period ended September 30, 2021. Looking ahead, the combined company is expected to deliver a 14%4 compound annual growth rate for Net Bookings (excluding the annual Net Bookings opportunities and any future acquisitions) over the three-year period from Take-Two’s Fiscal Years 2021 through 2024.

Addition of Zynga’s mobile titles will expand the Company’s base of Recurrent Consumer Spending (“RCS”). Through the addition of Zynga’s mobile business, particularly its diversified portfolio of live services and upcoming pipeline of new releases, Take-Two will increase its sources of RCS, a highly-attractive revenue stream that helps reduce volatility across reporting periods that has historically been driven by the cadence of Take-Two’s console and PC release slate.

Take-Two has also identified over $500 million of incremental annual Net Bookings opportunities to unlock over time, driven by:

Creation of new mobile games for many of the iconic franchises within Take-Two’s portfolio of intellectual property. Take-Two has an extensive catalog of commercially and critically successful console and PC titles with engaged and loyal communities of players, and there is a meaningful opportunity to create mobile games and new cross-platform experiences for many of these properties. Zynga’s nearly 3,000 employees include highly-talented mobile developers, paving the way for Take-Two to accelerate this strategic initiative and introduce its iconic intellectual properties across the fastest-growing platform in the industry.

Ability to optimize RCS by leveraging the collective knowledge across both companies. Both Take-Two and Zynga have extensive capabilities to engage players through live operations (“LiveOps”) and RCS initiatives. By combining resources and proven acumen, the teams at Take-Two and Zynga will deploy best-in-class practices throughout the organization to enhance and grow existing titles across the portfolio. Key opportunities include cross-marketing through a larger, shared customer database and improving game economies through more effective data analytics and machine learning models.

Other strategic benefits include the use of Zynga’s Chartboost advertising platform, which will improve new user acquisition through better audience targeting and optimize mobile advertising inventory to achieve greater yields; geographic expansion into growth markets across Asia, including India, and the Middle East, among other regions; and an enhanced focus on technological innovation and new business models that will utilize the collective knowledge of forward-thinking talent.

Take-Two expects approximately $100 million of annual cost synergies within the first two years after closing, primarily driven by the rationalization of duplicative overhead including corporate general and administrative expenses and public company costs, as well as the benefit of scale efficiencies across the enterprise.

The acquisition is structured to maintain a strong balance sheet, including significant annual cash generation. The combined company’s strategic and financial flexibility is expected to be greater than each company on a standalone basis, providing Take-Two with the financial resources to continue to invest in talent, development, and innovation, while also pursuing select inorganic growth opportunities.

Leadership

At the close of the transaction, Strauss Zelnick will continue to serve as Chairman and CEO, and the management team of Take-Two will continue to lead the combined company. Zynga’s highly skilled and proven management team, led by Frank Gibeau and Zynga’s President of Publishing, Bernard Kim, will drive the strategic direction for Take-Two’s mobile efforts and will oversee the integration, and day-to-day operations of the combined Zynga and T2 Mobile Games business, which will operate under the Zynga brand as its own label within the Company. Additionally, Take-Two will expand its Board of Directors to 10 members upon the closing of the transaction to add two members from Zynga’s Board of Directors.

Terms of the Acquisition

Zynga stockholders will receive $3.50 in cash and $6.361 in shares of Take-Two common stock for each share of Zynga common stock outstanding at the closing. The transaction is valued at $9.861 per share of Zynga common stock based on the market closing as of January 7, 2022, implying an enterprise value of approximately $12.7 billion.

The transaction includes a collar mechanism on the equity consideration, so that if Take-Two’s 20-day volume weighted average price (“VWAP”) ending on the third trading day prior to closing is in a range from $156.50 to $181.88, the exchange ratio would be adjusted to deliver total consideration value of $9.86 per Zynga share (including $6.36 of equity value based on that VWAP and $3.50 in cash). If the VWAP exceeds the higher end of that range, the exchange ratio would be 0.0350 per share, and if the VWAP falls below the lower end of that range, the exchange ratio would be 0.0406 per share.

Within the collar range, the final number of Take-Two shares estimated to be issued on a fully diluted basis will range between approximately 50.3 million and 58.5 million shares. Upon closing of the transaction, current Take-Two stockholders will own between 67.2% and 70.4% and current Zynga stockholders are expected to own between 29.6% and 32.8% of the combined company on a fully diluted basis, respectively, including the shares associated with expected settlement of Zynga’s two outstanding series of convertible notes due 2024 and 2026.

As part of the transaction, Take-Two has received committed financing of $2.7 billion from J.P. Morgan and intends to fund the cash component of the transaction through a combination of cash from its balance sheet as well as proceeds of new debt issuance.

The merger agreement provides for a “go-shop” provision under which Zynga and its Board of Directors may actively solicit, receive, evaluate, and potentially enter negotiations with parties that offer alternative proposals during a 45-day period following the execution date of the definitive agreement, expiring on February 24, 2022. There can be no assurance this process will result in a superior proposal. Zynga does not intend to disclose developments about this process unless and until its Board of Directors has made a decision with respect to any potential superior proposal.

1Within a 7.5% symmetrical collar based on a Take-Two share price of $169.19 as the midpoint.
Source: IDG Consulting.
3 Based on the trailing twelve-month period ended September 30, 2021. Combines Take-Two’s Adjusted Unrestricted Operating Cash Flow of $467 million and Zynga’s Operating Cash Flow of $302 million.
Due to different fiscal year ends, appropriate modifications were made to calculate information based on Take-Two’s fiscal year end.

Approvals and Close Timing

The transaction, which is expected to be completed during the first quarter of Take-Two’s Fiscal Year 2023, ending June 30, 2022, is subject to the approval of both Take-Two and Zynga stockholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

The transaction has been unanimously approved by the Take-Two and Zynga Boards of Directors. Moreover, each director and executive officer of Take-Two and Zynga have entered into voting agreements to support the transaction.

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BetVictor Canada launches Tracy McGrady Safer Gambling campaign

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BetVictor Canada has launched its new out-of-home advertising campaign across the streets of Toronto to promote NBA legend Tracy McGrady as its Safer Gambling Ambassador.

Two mobile digital trucks strategically targeting high-traffic areas near Scotiabank Arena, Rogers Centre, and major sporting events will provide prime audience exposure for the campaign, scheduled around Toronto Maple Leafs, Toronto Raptors, and Toronto Blue Jays home games.

To further enhance the campaign’s reach, BetVictor Canada has partnered with Clear Media Group to leverage digital taxi tops across Toronto, providing city-wide exposure with 100 taxis displaying key brand messaging. These digital taxi tops will run during peak evening hours (5:00pm – 9:00pm) on select dates until April 5th, 2025.

The campaign coincides with Problem Gambling Awareness Month, a nationwide grassroots campaign held each March that seeks to increase public awareness of problem gambling and promote prevention, treatment, and recovery services.

BetVictor Canada offers an array of tools and services to help its Canadian customers bet and play safely and responsibly, across a host of sports betting markets and online casino games.

Mark Harper, Head of Emerging Markets at BV Group, said: BetVictor is delighted to be participating in the National Council of Problem Gambling campaign in March, to help increase public awareness of problem gambling and the need to promote prevention, treatment and recovery services.

“In using our Safer Gambling Ambassador, Tracy McGrady, to raise awareness about BetVictor’s safer gambling tools such as loss limits, time alerts and product restrictions we are dedicated to ensuring all players have a safe gambling experience. #PGAM2025.”

The post BetVictor Canada launches Tracy McGrady Safer Gambling campaign appeared first on Gaming and Gambling Industry in the Americas.

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AGCO issues $110,000 in penalties to BetMGM Canada for offering cash to induce new gambling customers

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The Alcohol and Gaming Commission of Ontario (AGCO) has served BetMGM Canada Inc. with an Order of Monetary Penalty (OMP) of $110,000 for violations of the Registrar’s Standards for Internet Gaming.

In two separate incidents in 2024, BetMGM engaged marketing companies who offered cash to members of the public in return for opening new BetMGM accounts. The marketing activities occurred in public forums, such as a major national trade conference. Under AGCO’s Standards, operators are responsible for the conduct of their third-party suppliers who are contracted to support the operator’s Ontario gaming business, and must require their third-parties to meet Ontario laws, regulations and standards (Standard 1.19).

Ontario is one of the first jurisdictions in the world to establish and enforce rules that strictly limit high-risk inducement advertising and marketing in the online gambling industry. Registered iGaming operators are prohibited from offering gambling inducements, bonuses and credits as part of their broad public advertising and marketing activities (Standard 2.05). These Standards exist to protect Ontarians from predatory advertising and promotional marketing practices in order to limit the risk of gambling-related harm.

A registered operator served with an OMP by the AGCO has the right to appeal the Registrar’s decision to the Licence Appeal Tribunal (LAT), which is an adjudicative tribunal independent of the AGCO and part of Tribunals Ontario.

QUOTE

“Responsible gambling safeguards and the protection of Ontarians on registered gaming sites is among our key priorities. The AGCO monitors the activities of all registered operators and their third-party suppliers to ensure they are meeting our high standards and we continue to take strong action to ensure they operate within the public interest.”

Dr. Karin Schnarr, Chief Executive Officer and Registrar – AGCO

ADDITIONAL INFORMATION

BetMGM Canada Inc. failed to comply with the Registrar’s Standards for Internet Gaming. Specifically, the licensee failed to comply with the following provisions of the Standards:

  • 1.19 Operators are responsible for the actions of third parties with whom they contract for the provision of any aspect of the Operator’s business related to gaming in Ontario and must require the third party to conduct themselves in so far as they carry out activities on behalf of the operator as if they were bound by the same laws, regulations, and standards.
  • 2.05 Advertising and marketing materials that communicate gambling inducements, bonuses and credits are prohibited, except on an operator’s gaming site and through direct advertising and marketing, after receiving active player consent.

Contrary to the Standards, BetMGM Canada Inc. and/or their affiliates allegedly engaged in the following activities:

a) On or about January 13 and 14, 2024, BetMGM representatives were alleged to have attended the National Franchise Show and were offering $100 in cash to new players for opening a new account and depositing $15.
b) On or about March 11, 2024, BetMGM acknowledged that its marketing affiliate “Above the Street” had engaged in prohibited inducement marketing. The conduct resulted in 377 player sign-ups and $127,180.00 in commissions to “Above the Street”.
c) On or about April 13, 2024, another BetMGM marketing affiliate “Maple Leaf Marketing” engaged in prohibited inducements and marketing to induce on-site activations and acquire new players. The conduct resulted in 94 player sign-ups and about $34,000.00 in commissions paid to “Maple Leaf Marketing”.

The post AGCO issues $110,000 in penalties to BetMGM Canada for offering cash to induce new gambling customers appeared first on Gaming and Gambling Industry in the Americas.

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BCLC Launches “What’s played here stays here” Campaign

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BCLC’s new “What’s played here stays here” campaign is issuing an important reminder to British Columbians who choose to gamble – specifically that all net profit its operations generate stays in B.C. to help fund critical services like education, health care and community programs.

The campaign also reinforces that all other gambling websites operating in B.C. are illegal and take away funds from critical community programs and services.

“Across B.C. and Canada, we’ve seen incredible groundswell around the importance of buying and supporting local, and that’s no different for British Columbians who choose gambling for their entertainment. We want our B.C. players to know they can find a world-class gambling experience in their own backyard, whether it’s at one of our 33 casinos, 3,400 lottery retailers, or online at PlayNow.com, and that the proceeds from their play with BCLC make a positive impact at home in their community,” Pat Davis, President and CEO of BCLC, said.

Along with illegal online gambling websites, BCLC also competes with Washington State and Las Vegas casinos, all of which aggressively market to B.C. residents.

“BCLC continues to raise awareness that these gambling options do not support B.C.’s economy and take away funds from vital provincial and community-based programs and services. In a time when British Columbians are standing united, we want to reinforce that playing together with BCLC helps make B.C. even better,” Pat Davis added.

The post BCLC Launches “What’s played here stays here” Campaign appeared first on Gaming and Gambling Industry in the Americas.

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