Zynga’s $1.8 Billion Acquisition Puts Its Strong M&A Track Record to the Test
Graphic: Business Wire
Zynga is acquiring Turkish mobile-game developer Peak Games for $1.8 billion, its largest acquisition of all time. Peak Games titles include Toon Blast and Toy Blast. The deal is expected to close in the third quarter of 2020.
Franchises increase Zynga’s mobile daily active users (DAUs) by more than 60%.
Collectively, Toon Blast and Toy Blast have more than 12 million average mobile DAUs.
Toon Blast and Toy Blast expand Zynga’s portfolio to eight Forever Franchises.
Toon Blast is consistently a top 20 grossing U.S. game, while Toy Blast is normally in the top 40, according to Jefferies analyst Alex Giaimo.
Financial impact: Peak could add about $300 million to Zynga’s bookings in the second half of the year, according to Zynga. Management also raised its Q2 and FY guidance on strong performance in Q2 (excluding Peak).
Strong M&A history: Zynga has a positive track record when it comes to making deals.
Zynga’s stock has doubled since it purchased Turkish game developer Gram Games in May 2018 and Small Giant Games in December 2018.
“Under ZNGA's ownership, Gram has grown from a $110MM run rate at the time of the acquisition to $280MM in LTM Bookings (est), while Small Giant has grown from a $220MM run rate to $370MM LTM (est),” according to Giaimo.
In 2017, Zynga bought Peak’s casual card games portfolio for $100 million.
Additional exposure to key markets: A majority of Peak’s business outside of the U.S. comes from Japan, which Zynga management emphasized as an important and strategic market for both Zynga and the industry as a whole. Management said on its analyst call that Peak Games experiences strong retention metrics in Japan and is consistently in the top 30 in iOs and Android.
Capitalizing on the stay-at-home bump: Zynga is seizing the opportunity to parlay its recent surge in engagement and download growth into a major acquisition. According to SimlarWeb Android data cited by Jefferies, Words with Friends 2 experienced month-over-month download growth of 133%, while Empires and Puzzles & Merge Dragons grew 21% and 15%, respectively. Go deeper.
