Zynga Stock Pops on OMGPOP Acquisition
Zynga stock popped on the company’s announcement that it snapped up game maker ‘OMGPOP,’ snagging its hit new game ‘Draw Something.’
This is part of the social game maker’s strategy to diversify away from its reliance on Facebook.
The company did not disclose any financial terms of the deal and wouldn’t comment on whether the acquisition will be accretive. Zynga has a secondary offering on file with the SEC, so it’s in a quiet period. But CNBC’s Kayla Tausche reportsthat Zynga is paying about $200 million.
OMGPOP emerged as a hot takeover target as its Draw Something game took off in the past six weeks since it launched.
In that time the game has been downloaded over 35 million times and more than 1 billion drawings were created in the game in the last week alone. Zynga calls the game a “cultural phenomenon.”
Though OMGPOP has a number of big Facebook games, its appeal to Zynga is clearly in its strength as a mobile app maker. It doesn’t hurt that OMGPOP also has its own destination website. Anything that can diversify Zynga away from its reliance on Facebook—it pays the social network a 30% cut of its revenue—and away from a handful of hit games—is a good thing.
The big question which Zynga did NOT answer on a conference call with the media today: Can Zynga continue to make this kind of hit game, so it’s not forced to shell out hundreds of millions every time another company launches the likes of ‘Draw Something’? The barriers to entry in the social and mobile game business are so low, Zynga clearly has to keep an eye on rivals – or acquisitions—that can OMGPOP out of nowhere.
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