US social mobile publisher Zynga has acquired Finnish indie Small Giant Games in a deal which values the company at over $700 million.
Zynga will pay $560 million upfront, split $330 million cash and $230 million in new stock, for 80 percent of Small Giant.
The remaining 20 percent will be acquired over the coming three years as an earnout based on future profitability.
Zynga has over $400 million in cash and equivalents but will open an additional $200 million credit facility to partially fund the deal.
“Small Giant has created an innovative game that delivers a unique player experience that engages over the long term,” said Zynga CEO Frank Gibeau.
“We are excited that Small Giant is joining Zynga as they enhance our next phase of growth.”
Small Giant Games, which as well as mid-core mobile match-3 RPG Empires & Puzzles has another game in development, will operate as a standalone company within Zynga’s larger corporate structure.
I am confident that partnering with Zynga is the right next step in our evolution.Timo Soininen
“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,” stated Timo Soininen, Small Giant Games CEO.
Following the deal, Zynga now boasts multiple European development studios, including NaturalMotion in London and Brighton, Gram Games in Istanbul and London, Peak Games also in Istanbul, and Zynga Finland based in Helsinki.
Everything on the up
Launched in 2017, Empires & Puzzles has been downloaded over 26 million times, and has been an international hit, also consistently ranking in the top 10 top grossing charts in the US on the Google Play store and Apple App Store.
It’s thought Small Giant, which closed an investment round of $41 million in early 2018, has an annual turnaround of around $200 million and continues to grow fast.
As well as the deal, which is expected to close 1 January 2019, Zynga increased its Q4 sales guidance thanks to the stronger than expected performance of existing games such as Merge Dragons!, Words With Friends and CSR Racing 2.
It now expects to post bookings of $260 million, up $10 million on previous guidance.