Leading social games developer Zynga has inked a $1.8bn deal with Turkish game maker Peak. The deal is expected to boost Zynga’s margins as well as add $300 million to the company’s bookings and push active players by 60%.
Zynga to Finalize Peak Acquisition in Third Quarter
Developer of social games Zynga has inked a deal with Peak, a Turkish mobile gaming business which has developed a number of popular games, including Toon Blast and Toy Blast. The acquisition deal amounts to $1.8 billion, one of the largest in the sector. The news was announced by Zynga Inc. Chief Executive Officer Frank Gibeau during an interview on Monday.
The sum will cover 100% of Peak’s stake, and the amount will be divvied up between a $900 million cash payment and $900 paid as common stock, with the completion of the deal on track for Q3, 2020.
Zynga has commented on the deal arguing that the addition of Peak will strengthen its game development process as well as help it push its live services. Previously, Zynga bought out Peak’s casual card business in 2017 for $100 million, broaching the first collaboration between the two companies.
Expectedly, Zynga’s revenue in the first quarter of the year grew significantly, increasing by 52% to $404 million amid the coronavirus outbreak. The business received a significant power-up with consumers staying at home and opting into various live entertainment options. According to Gibeau, the acquisition should help Zynga drive a 60% increase in the number of people engaging with the company’s products and playing its games.
The Frank Gibeau Era Promises Successes
Gibeau stepped into the role of CEO back in 2016, giving Zynga an entirely new direction, and one that would see it focus on acquiring multiple studios that can create legacy games and lasting franchises allowing the company to establish a strong footprint.
Commenting on the deal, Gibeau noted that Peak was known for the development of unique puzzle games and that Zynga was excited to add one of the most creative companies in social gaming to Zynga’s own powerhouse. He further shared his expectations that the pooled efforts between the companies would amount to quicker growth and overall benefits.
With the addition of Toon Blast and Toy Blast, we are expanding our live services portfolio to eight forever franchises, meaningfully increasing our global audience base and adding to our exciting new game pipeline. As a combined team, we are well positioned to grow faster together.
Gibeau remained very optimistic about the joint future of the companies. According to him, Peak could add an additional $300 million in live bookings to Zynga’s bottom line. The addition of Peak should now help Zynga expand its margins, although even without the acquisition, Zynga has already adjusted its revenue guidance for the second quarter of 2020.