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Zynga Moves to Acquire European Game Studio

xrrr / iStock

Zynga Inc. (NASDAQ: ZNGA) shares made a handy gain on Friday after the firm announced that it would be acquiring a European game studio. The transaction is expected to close as of January 1, 2019.

Specifically, the firm announced it has entered into an agreement to acquire Helsinki-based mobile game studio, Small Giant Games, creator of the hit franchise Empires & Puzzles.

Small Giant adds an experienced team and another innovative Forever Franchise to Zynga’s live service portfolio while also expanding its new game pipeline. Small Giant is expected to be accretive to Zynga’s profitability and be a meaningful growth driver in 2019 and beyond.

Under the terms of the deal, Zynga will acquire 80% of Small Giant for $560 million, comprised of roughly $330 million in cash and $230 million of unregistered Zynga common stock. Zynga will purchase the remaining 20% of Small Giant over the next three years at valuations based on specified profitability goals.

Zynga CEO Frank Gibeau commented:

We’ve been impressed by the quality and momentum of Empires & Puzzles as we add another Forever Franchise into Zynga’s portfolio. Small Giant has created an innovative game that delivers a unique player experience that engages over the long term. We are excited that Small Giant is joining Zynga as they enhance our next phase of growth.

Shares of Zynga were last seen up about 5% at $3.78, in a 52-week range of $3.20 to $4.57. The consensus analyst price target is $4.74.

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