Zynga Is Said to Pay Over $20 Million for A Bit Lucky
Zynga Inc. (ZNGA), the largest maker of games played on Facebook Inc. (FB)’s social network, has agreed to acquire San Mateo, California-based game maker A Bit Lucky Inc., adding titles to attract more serious players.
Zynga paid $20 million to $25 million for the startup, according to two people with knowledge of the deal, who asked not to be named because terms weren’t disclosed. A Bit Lucky’s more than 20 employees will join Zynga, the San Francisco-based company said yesterday in a blog post.
Mark Pincus, Zynga’s chief executive officer, has used deals to reach new markets and add developers. A Bit Lucky has focused on so-called mid-core games, which are more graphically rich and challenging than casual online games, and may help Zynga reach new types of players willing to pay more money, said Atul Bagga, an analyst at Lazard Capital Markets LLC.
“The acquisition could help Zynga broaden its offering beyond casual games,” Bagga wrote yesterday in a research note. “Our conversations with industry contacts suggest that monetization for mid-core games could be meaningfully higher than that for casual games.”
A Bit Lucky’s team will continue to develop “Solstice Arena,” its planned game for PCs and tablet computers.
Dani Dudeck, a spokeswoman for Zynga, declined to comment on the terms of the deal.
Pincus was personally involved in the acquisition of A Bit Lucky, Frederic Descamps, the startup’s CEO and co-founder, said in a letter to his employees that was posted to Zynga’s blog.
“Meeting Mark Pincus was a turning point for us,” Descamps wrote. “His passion to define a new way to play and his entrepreneurial drive are very contagious.”
A Bit Lucky is backed by venture capital firms Accel Partners, Rembrandt Venture Partners and Blumberg Capital, as well as Japanese game maker Nexon Co. (3659), according to its website. Earlier this year, it teamed up with Nexon to make one of its games, “Lucky Space,” available to Korean users.
At least eight managers have left Zynga since early August after a second-quarter earnings report missed analyst expectations and showed slowing sales.
Zynga fell less than 1 percent to $3.08 at the close in New York. The company’s shares have declined 69 percent since its December initial public offering, eroding the value of equity used to compensate staff.
Zynga had $1.64 billion in cash and short- and long-term investments as of June 30, according to its latest quarterly filing. It spent a combined $147.2 million for 22 companies in 2010 and 2011.
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