Zynga Inc., the biggest maker of
games on Facebook Inc., is seeking a valuation of as high as $10
billion in an initial public offering, according to two people
briefed on the matter.
Zynga plans to raise about $900 million by selling shares
at about $8 to $10 apiece, said one of the people, who asked not
to be identified because the plans haven’t been made public.
Zynga would sell 10 percent or fewer of its outstanding shares,
which are scheduled to be priced on Dec. 15, the person said.
At $10 billion, Zynga
would be valued at below the $14.05
billion that the company said in regulatory filings
its fair value. Zynga would also be the second-largest U.S. game
company after Activision Blizzard Inc. (ATVI)
, which has a
capitalization of $14.2 billion. Electronic Arts Inc. (ERTS)
bought Zynga rival PopCap Games in August, has a market value of
$7.69 billion based on yesterday’s close.
Zynga would be valued at as much as 9.8 times trailing 12-
month sales, compared with about 3 times for Activision and 2
times for Electronic Arts, according to data compiled by
Dani Dudeck, a spokeswoman for San Francisco-based Zynga,
declined to comment. Paying Customers Climb
Under Chief Executive Officer Mark Pincus
, Zynga aims to
capitalize on the popularity of social networks and virtual
goods. The company lets users play games for free and then makes
money by selling items -- say, a townhouse in “CityVille” or a
shipyard in “Empires & Allies.” Zynga is pressing ahead with
IPO plans even as other Internet companies that recently sold
shares, including Groupon Inc.
and Angie’s List Inc
hammered. Both were trading yesterday below their offer prices.
Founded in 2007, Zynga has hired Morgan Stanley and Goldman
Sachs Group Inc. (GS)
to manage the IPO. Zynga’s shares will trade on
the Nasdaq Stock Market under the symbol ZNGA.
Zynga updated its filings on Nov. 4 to show that 6.7
million of its users were paying customers in the first nine
months of the year, up from 5.1 million in the year-earlier
more than doubled to $828.9 million.
The worldwide virtual-goods market will more than double to
$22.5 billion in 2015 from $9.27 billion last year, according toLazard Capital Markets
To help it add more customers hungry for virtual goods,
Zynga is stepping up spending on research and marketing -- which
in turn is crimping profit. The company posted $30.7 million in
net income in the nine months that ended in September, down from
$47.6 million a year earlier. Online markedsføringkung fu clothing