Take-Two Interactive Software (TTWO) has acquired Spain's privately-held Social Point for $250 million in cash and stock, as the New York City-based company shifts its focus toward the lucrative mobile gaming market.
Take-Two paid $175 million in cash and $75 million in stock for the free-to-play mobile game developer. The transaction has additional earn-outs of up to $25.9 million.
Take-Two currently generates the bulk of its revenue from console gaming. For the three months ended September, revenue from console gaming made up about $353 million of the total $420 million.
The mobile gaming market represents a substantial opportunity for the company. Consumers are expected to spend $44.8 billion on mobile gaming this year, according to industry tracker SuperData Research.
Social Point's two most popular games, "Dragon City" and "Monster Legends," have been downloaded more than 180 million times on Apple's (AAPL) iOS and Alphabet's (GOOGL) Android operating systems, Take-Two said in a statement.
"With the acquisition of Social Point, Take-Two has further diversified its business, expanded its portfolio of owned intellectual property, and significantly enhanced its position in the fast-growing free-to-play mobile gaming space," Take-Two CEO Strauss Zelnick noted.
The deal is expected to be immediately accretive to net revenue and net cash provided by operating activities. The transaction should be accretive to adjusted net income per share in the fiscal year ending March 2018, according to Take-Two.
Social Point generated net revenue of $90.8 million and Ebitda of $19.9 million for the 12-months ended December 31, Take-Two said.