Zynga IPO Prices! Great Offering, Lousy Voting Rights (ZNGA)
December 15, 2011 by Jon C. Ogg
Normally we would not care about listing the “Class A” shares, but Zynga has a complicated share structure with Class A, as well as Class B and Class C shares. The filing notes:
- Each share of Class A common stock will be entitled to one vote per share. Each share of Class B common stock will be entitled to seven votes per share. Each share of Class C common stock will be entitled to 70 votes per share. Each share of the Class B common stock and Class C common stock will be convertible at any time into one share of Class A common stock.
The Class B shares will represent approximately 72.5% of the voting power and the Class C shares will represent approximately 25.7% of the voting power. Tally this up and it looks as though the Class A shares, which the IPO investors are getting, will have a whopping 1.8% of the voting power. Zynga is selling a whopping $1 billion worth of stock and the cumulative sum by the buyers is less than 2%. Maybe Zynga should consider trying to just avoid holding shareholder meetings in the future because the public buyers have no power at all.
Mark Pincus, founder and Chief Executive Officer, holds shares of the Class B common stock and all of the shares of Class C common stock. He will control approximately 36.2% of the total voting power of our outstanding capital stock after the IPO.
The book-runners are Morgan Stanley and Goldman Sachs. Co-managers are listed as Bank of America Merrill Lynch, Barclays Capital, J.P. Morgan, and Allen & Company.
What is funny about our own skepticism and caution is that it may be displaced for the near-term. Despite our concerns of the voting power limits this IPO could have priced higher. It is also being touted by many as already being at a premium when shares debut in Friday trading. Still, Stern Agee labeled it with an “Underperform” rating ahead of the IPO as it is not in the underwriting group.
Here is the full ninth amended S-1 filing that shows the full ownership structure, financials, competitors, and more.
JON C. OGG
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