01—Abstract
Summary
Summary of the 8-K filed May 26, 2022. Cited figures are marked; the original filing is the authoritative source.
Take-Two Interactive Software, Inc. (TTWO) filed an 8-K on May 26, 2022, to report the completion of its acquisition of Zynga Inc. The acquisition, which closed on May 23, 2022, involved a merger where Zynga became a wholly-owned subsidiary of Take-Two.
This transaction has significantly altered Take-Two's capital structure and business operations. The filing also details significant financing activities, including the establishment of a new $500 milliona unsecured five-year revolving credit facility, replacing a previous agreement.
Additionally, Take-Two addressed the convertible notes issued by Zynga, outlining how these notes will be assumed by Take-Two, with conversion rights now entitling holders to a mix of Take-Two common stock and cash. These events mark a pivotal moment for Take-Two, integrating a major mobile gaming entity and establishing new credit arrangements.
02—Key points
Key Highlights
- Completion of Zynga Acquisition: Take-Two has successfully acquired Zynga in a transaction that closed on May 23, 2022. Zynga now operates as a wholly-owned subsidiary of Take-Two.
- New Credit Facility Established: A new $500 million unsecured five-year revolving credit facility was entered into, replacing the previous credit agreement. This facility includes sublimits for letters of credit and foreign currency borrowings, with an option for expansion.
- Synergistic Conversion of Zynga Notes: Zynga's outstanding convertible notes (2024 and 2026 maturities) have been effectively converted. Holders now have the right to convert into a combination of Take-Two common stock and cash, reflecting the acquisition's terms.
- Termination of Capped Call Transactions: Zynga entered into termination agreements for its previously established capped call transactions related to its convertible notes, with associated cash payments expected from the counterparties.
- Increased Authorized Share Capital: Take-Two amended its certificate of incorporation to increase the authorized shares of common stock to 300,000,000 and preferred stock to 5,000,000 to accommodate the acquisition.
- Delisting of Zynga Stock: Zynga's common stock ceased trading on the NASDAQ and was delisted effective May 23, 2022.
- Board of Directors Additions: Two former Zynga directors joined the Take-Two Board of Directors following the closing of the acquisition.
03—Questions
Frequently Asked Questions
What is the primary purpose of this 8-K filing?
This 8-K filing announces the completion of Take-Two Interactive Software, Inc.'s acquisition of Zynga Inc., which officially closed on May 23, 2022. It also details related material agreements, including a new credit facility and adjustments to Zynga's convertible notes.
How does the acquisition of Zynga impact Take-Two's financial structure?
The acquisition significantly expands Take-Two's scale, particularly in the mobile gaming sector. Financially, it involves the issuance of approximately 46.3 million shares of Take-Two common stock to former Zynga shareholders, a new $500 million credit facility, and the assumption and modification of Zynga's outstanding convertible debt.
What are the key terms of the new revolving credit facility?
The new credit facility is an unsecured, five-year revolving credit facility totaling $500 million. It includes sublimits for letters of credit ($100 million) and foreign currency borrowings ($100 million). It also allows for uncommitted incremental capacity of up to $250 million or 35% of Consolidated Adjusted EBITDA. Interest rates are variable, based on the Alternate Base Rate or SOFR Rate, plus a margin determined by Take-Two's credit rating.
What happens to Zynga's convertible notes after the acquisition?
Zynga's 0.25% Convertible Senior Notes due 2024 and 0% Convertible Senior Notes due 2026 have had their terms modified. Following the acquisition (deemed a 'Fundamental Change'), holders have the right to convert their notes into a 'Reference Property,' which consists of 0.0406 shares of Take-Two Common Stock and $3.50 in cash per $1,000 principal amount of notes, plus cash for fractional shares. Holders also have the right to require Take-Two to repurchase their notes.
04—Continue