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Would you buy Zynga if the shareholders PAID you to take it away?
“Zynga is currently trading at a discount to cash”, scream the pundits. “Zynga’s shareholders would like to pay you to it off their hands” say the headlines.
![](https://www.gamesbrief.com/assets/logos/zynga.jpg)
Is it really true? Yesterday’s market value for Zynga was $1.67 billion. They have $1.22 bn in cash or marketable securities (meaning bonds and shares that they could sell at the touch of a button in the market). They have another $426m in long term investments such as corporate bonds. They bought their SF headquarters for $275m in April 2012. So the financial and property assets total realisable assets are $1.92 billion. Based on the share price on Wednesday 24th October (before their third quarter announcement), if you bought all of the shares for $1.67m, you would immediately get cash and property worth $1.92 bn. The shareholders would have paid you $247 million to take Zynga off their hands.
In practice this won’t happen. Firstly, shareholders expect a premium when someone buys the whole of the company. Secondly Mark Pincus has voting rights and could block a deal. Thirdly if the market gets a sniff that a serious buyer is circling, the price will immediately spike. The only person who can take Zynga private is Mark Pincus (with financial help) and I would bet that he is considering it.
The more interesting question for readers of MCV is whether Zynga’s travails reflect the wider free-to-play business. On the way up, Zynga was lauded as the company that embodied the new world of gaming. It had expanding audiences, growing revenues and brought a new category of gamer – the whales – to wider attention. Many pundits, myself included, viewed it as a massive success story.
I still think that any company sitting on $1.6 billion in cash after less than 5 years in business has done something right.