Shares of video game maker Zynga (ZNGA) - Get Report surged on Monday after the company said it has entered into an agreement to buy "Toon Blast" and "Toy Blast" mobile-game maker Peak for $1.8 billion in cash and stock.
Under terms of the deal, Zynga will pay $900 million in cash and an additional $900 million in stock to purchase Istanbul-based Peak, the company said in a statement. The deal is slated to be completed in the third quarter.
Specifically, Zynga will pay Peak’s owners 114 million shares priced at $7.92, the volume-weighted average closing over the past 30 trading days. Zynga will have $600 million in cash on its balance sheet after the deal.
Zynga's stock was up 4.43% at $9.46 in trading on Monday.
The Peak deal will bring Zynga a popular lineup of puzzle games called "Toon Blast" and "Toy Blast." The company is making the acquisition at a time when its business is booming, fueled by consumers staying at home with few live-entertainment options.
“With the addition of Toon Blast and Toy Blast, we are expanding our live services portfolio to eight forever franchises, meaningfully increasing our global audience base and adding to our exciting new game pipeline,” Zynga CEO Frank Gibeau said.
While the company expects to see a boost in revenue from the Peak deal, Zynga also expects to post wider losses for its second quarter and full year.
In an accompanying update on its quarter and full-year guidance, Zynga said it now expects to post a second-quarter loss of 17 cents a share vs. a loss of 6 cents, and a full-year loss of 36 cents a share vs. 25 cents.