Zynga Strikes $560 Million Deal for Mobile Gamemaker Small Giant

(Bloomberg) -- Zynga Inc. agreed to pay $560 million for Small Giant Games, which makes the Empires & Puzzles role-playing game that’s popular on Android phones.

The social gaming pioneer is buying 80 percent of Small Giant, according to a statement Thursday. Zynga is funding the purchase of the Helsinki-based company with $330 million in cash and $230 million in new common stock.

The deal, slated to close by Dec. 31, gives Zynga a major new title with strong international appeal. Empires & Puzzles has been downloaded more than 26 million times since its introduction 18 months ago and is the third-highest-grossing game in the Google Play store, according to data from App Annie. The game lets fans collect heroes and battle other players.

It will instantly become one of Zynga’s largest revenue generators, along with Words With Friends, according to Chief Executive Officer Frank Gibeau.

“It’s a real nice mash-up,” Gibeau said in an interview. “Easy to get into, difficult to master.”

Small Giant, founded in 2013, raised $41 million in February from EQT Partners, Creandum, Spintop Ventures and Profounders Capital, according to a statement at the time.

Zynga, with early hits such as FarmVille and Zynga Poker, has fought to stay relevant in a business where competition is fierce and consumer attention spans short. The company has attracted takeover interest from other game developers as industry dealmaking picks up, people familiar with the matter said in October.

Zynga has a bright future as an independent company, Gibeau said, without commenting specifically on buyer interest.

“We’ve been really focused on scaling and growing,” he said. “We’re completely focused on being on offense.”

On his watch, the San Francisco-based company has made acquisitions and introduced frequent updates to its existing titles to build what he calls “forever franchises.”

Separately, Zynga lifted its forecast for fourth-quarter revenue and adjusted earnings based on stronger-than-expected holiday sales.

Zynga fell 3 percent to $3.56 as of 3:31 p.m. in New York trading Thursday, giving the company a market value of about $3.1 billion.

©2018 Bloomberg L.P.

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