After deal, Zynga's best day coincides with rough Take-Two outing; Analysts weigh offer prospects
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Zynga stock (NASDAQ:ZNGA) is pulling its best day ever, now up 42.1% in the wake of news that Take-Two Interactive Software (TTWO
-14.7%) has a $12.7 billion deal to acquire the mobile game maker.
The deal has an enterprise value of $12.7 billion, but the cash/stock offer sets up a straight deal price of just over $11 billion.

And while that's a 64% premium over Zynga's last close, it's basically near even with Zynga's price from last August - before it got hit hard in an earnings report reflecting the harsh effects of Apple's iOS 14 privacy changes on business.
That suggests Zynga may realize that its own Apple situation may not be improving anytime soon, WSJ notes: Zynga's last report projected net bookings growth of just 2% in Q4, its worst in five years.
Part of the optimism on Zynga's side - if not Take-Two, whose stock is making its worst one-day drop since 2009 and is now at the lowest point since June 2020 - is the prospect of another offer coming in, given that there's a 45-day go-shop period alongside the fact that Zynga didn't engage in a sales process for a deal.
Jefferies says there's "tremendous value in Zynga and wouldn't be surprised if there are over-the-top bids." As for a combined Take-Two/Zynga, the firm paid most attention to a change in management's tone, toward focusing on mobile for core franchises using Zynga's expertise. A surprising guide to 14% compound annual growth in net bookings adds confidence that there are "substantial titles" in the core pipeline ready for release. It has a Buy rating on both stocks, with a $164.60 target on TTWO and an $11 target on Zynga.
Truist Securities expects there could be some interest in Zynga from large integrated ad-network publishers, but ultimately expects Take-Two's deal to go through, with three benefits: Take-Two gets faster in bringing its IP to mobile; Zynga's Chartboost ad network gets increased scale; and Zynga gets leadership of the combined mobile organization.
On that mobile point, Wedbush's Michael Pachter had praise for Take-Two, noting that the deal transforms Take-Two's business from "10% mobile to over 50%, giving it outstanding growth prospects in the future." With a $12 target on Zynga, he says getting it for under $10 means a "bargain."
Related stocks are on the move alongside the big deal today. Playtika (NASDAQ:PLTK) is up 9% to its highest point in a month. Take-Two peer Ubisoft (OTCPK:UBSFY) is up 3.8%, though other key publishers are down: Activision Blizzard (NASDAQ:ATVI) -1.7%; Electronic Arts (NASDAQ:EA)
-2%. AppLovin (NASDAQ:APP) is up 1.7% against a tough market today, and SciPlay (NASDAQ:SCPL) is 2% higher.
In an interview, Take-Two chief Strauss Zelnick wasn't swayed by his company's investor reaction, noting "the math is the math."