Zynga Aims for $10 Billion Valuation in IPO

Date: Dec 01 2011 02:18:10 Source: Reuters Views:
KeyWord: Zynga IPO, IPO, Zynga 10 Billion, Zynga Valuation Down, Zynga Valuation, Zynga Initial Public Offering, Initial Public Offering

NEW YORK, Nov 30 (IFR) - Facebook games developer Zynga Inc is seeking a lower-than-expected $10 billion valuation for its initial public offering, which is to be priced on December 15, two people close to the process said on Wednesday.

By Anthony Hughes and Robert Sherwood From Reuters

Zynga IPO

In one of the most highly anticipated deals of the year, Zynga plans to file terms with regulators on Friday for an IPO that would generate around $900 million in proceeds, based on an indicative range of $8 to $10 per share and an initial float of 10 percent, according to the sources.

Zynga spokesman Adam Isserlis declined to comment. In a filing two weeks ago, the company said a third-party analysis had valued Zynga at $14.05 billion.

But that figure would have been too ambitious in these rocky market conditions, analysts said. Video game heavyweight Electronic Arts Inc has a market value of $7.69 billion while Activision Blizzard Inc has a market cap of $14.21 billion.

Zynga rose to prominence on viral games such as "Farmville," which is still among one of the most popular games on the Facebook social network. While its games are free, Zynga makes money from selling virtual items such as tractors and weapons that people use in its game worlds.

The company is profitable, but its cash flow growth slowed in the September quarter as expenses increased due to investments in new games. Nonetheless, Zynga is on track to become one of the fastest Silicon Valley companies to achieve more than $1 billion a year in revenue.

Wedbush Securities analyst Michael Pachter said Zynga could command a higher valuation if it waited until 2012 to go public.

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