Zynga Inc (NASDAQ: ZNGA) reported the purchase of Small Giant Games for $560 million in cash and stock. The company raised fourth-quarter GAAP sales guidance from $235 to $243 million. The company also raised fourth-quarter adjusted EBITDA guidance from $32 million to $33 million.
Thursday’s announcement from the San Francisco-based games developer said it was buying the Helsinki-based Small Giant, creator of the hit franchise Empires & Puzzles.
In so doing, according to Thursday’s news release, "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"
According to Zynga CEO Frank Gibeau, "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."
The final upfront transaction consideration will also include customary closing adjustments and will be partially funded by a newly established $200 million revolving credit facility. The transaction is expected to close effective as of January 1, 2019 and Zynga will purchase the remaining 20% of Small Giant over the next three years at valuations based on specified profitability goals.
ZNGA shares gained 19 cents, or 5.2%, to $3.78.
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