Social game developer giant Zynga has entered into an agreement to acquire Small Giant Games, a mobile app development company behind the popular mobile game Empires & Puzzles, in a deal expected to total $700 million.
Zynga will acquire 80 percent of Small Giant Games for $560 million, composed of $330 million in cash and $230 million of unregistered Zynga common stock. While the remaining $200 million will be funded using a credit facility.
Zynga chief executive officer Frank Gibeau said in a statement:
“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.”
The acquisition is expected to be finalized by January 1, 2019 and Zynga will purchase the remaining 20 percent of Small Giant over the next three years “at valuations based on specified profitability goals.”
Since being founded in 2013, the Helsinki-based Small Giant Games had raised $52 million in equity funding from EQT Ventures, Creandum, Spintop Ventures, Profounders and others. The company reported around $33 million of revenue for Empires & Puzzles, just 10 months after its launch in 2017. Small Giant, which is also behind Alliance Wars and Season 2: Atlantis, says they exceeded 2017’s revenue just four months into 2018.
Small Giant CEO Timo Soininen said in a statement:
“Our studio was founded on the idea that small, skillful teams can accomplish giant things, and I am confident that partnering with Zynga is the right next step in our evolution. We will now operate as a separate studio within Zynga, maintaining our identity, culture and creative independence. By leveraging the expertise and support from the wider Zynga team, we will amplify the reach of Empires & Puzzles and the new games in our development pipeline.”
Founded in 2007, Zynga is the developer of popular mobile games such as FarmVille, Zynga Poker, Words with Friends and several others. Zynga has reported a revenue of $248.88 million for Q3 of 2018, and is expected to bring in $243 million in revenue for Q4 of 2018.
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