This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Zynga Swipes NaturalMotion For $527M

NEW YORK (The Deal) -- San Francisco games developer Zynga (ZNGA) said late Thursday it will buy mobile games specialist NaturalMotion for about $527 million in cash and stock.

Zynga, whose stock has fallen by more than half in the two years since its initial public offering, disclosed the acquisition as it announced a 43% decrease in fourth-quarter revenue and said it would cut 15% of its own workforce, or about 314 jobs.

The acquisition provides an exit for the Oxford, England-based target's backers, which include Balderton Capital, the leading shareholder with a 24% stake; Balderton's former U.S. sister company, Benchmark Capital, and Oxford University.


WATCH: Zynga Buys Maker of Clumsy Ninja and CSR Racing in Mobile Push


NaturalMotion was founded in 2001 and is 8% owned by CEO Torsten Reil, a former Oxford University student who began by designing 3D software to power third-party games and movies before starting to develop games of his own.

Zynga said the purchase expands its lines into people and racing simulation, brings to its portfolio hit titles, including CSR Racing and Clumsy Ninja and increases its presence in the mobile games market.

"We believe that bringing Zynga and NaturalMotion together is the right step at the right time," said Zynga CEO Don Mattrick in a statement. "Our acquisition of NaturalMotion will allow us to significantly expand our creative pipeline, accelerate our mobile growth and bring next-generation technology and tools to Zynga that we believe will fast track our ability to deliver more hit games."

The buyer said NaturalMotion will boost its own adjusted Ebitda by $15 million, to $25 million, excluding transaction-related expenses in 2014. It didn't disclose financial information for NaturalMotion, other than to say it had 2013 bookings - a measure of revenue in the games sector - of $62 million. Zynga said it expects NaturalMotion to contribute $70 million to $80 million in bookings in 2014 after the expected February close of the transaction. Zynga's own 2013 bookings were $716.2 million.

The price breaks down into $391 million in cash and about 39.8 million shares of Zynga Class A shares. NaturalMotion employees who stay will receive about 11.6 million of the shares over a three-year period.

Balderton Capital declined to disclose its returns on the sale. It has been a NaturalMotion investor since 2006.

Zynga on Thursday said it had fourth-quarter revenue of $176.4 million. Its net loss narrowed to $25 million from $49 million. It also said it expects first-quarter revenue of $155 million to $165 million and a net loss of $49 million to $56 million, including a restructuring charge of about $15 million to $17 million. The job cuts announced Thursday come on top of about 520 layoffs last year, which cut Zynga's workforce by 18%.

The NaturalMotion acquisition will add 260 employees.

Stock quotes in this article: ZNGA 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,427.52 +2.67 0.02%
S&P 500 1,862.53 +0.22 0.01%
NASDAQ 4,089.3580 +3.1330 0.08%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs