Zynga up Over 6% on Rumors of $200m Acquisition of OMGPOP

Zynga up Over 6% on Rumors of $200m Acquisition of OMGPOP

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Zynga Inc (NASDAQ:ZNGA) , the mobile and Facebook game maker, shot up on Wednesday 6% after the company announced that it would be hosting a media call at 3:00 pm ET. Most are speculating that the company will announce its plans to acquire the company OMGPOP, who became an overnight sensation with their game “Draw Something”.
Zynga became popular with their flagship games “FarmVille” and “Words With Friends” and became a part of the high flying internet IPO bonanza in the last year. As far as OMGPOP is concerned, Zynga has been reportedly in talks with the game company over the past few days according to TechCrunch.
All Things D says that the acquisition would cost Zynga $200 million but it would help strengthen the company’s portfolio of games offered and thereby increasing market share in the mobile/Facebook game arena.
The most important part of this purchase for Zynga would be their control over OMGPOP’s most popular game “Draw Something”. This game is almost worth the acquisition itself. “Draw Something” is a game that is essentially a social Pictionary game that can be played on the iPhone and Android phones.

However, the key part of this is that “Draw Something” sites at the top of the “top paid” and “top free” lists on iTunes. It is also the top grossing app on iTunes which is even more unusual. Sources that are familiar with the matter have said that the company has been netting $250,000 from the game each day and that is after Apple Inc’s (AAPL) 30% cut.
That is absolutely amazing that an app, so simple can be so popular and reel in so much cash. I think this could definitely help Zynga get to the next level and really pay off for the firm. The only problem I have is that the company is paying $200 million for OMGPOP which may be a little too high.

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Unfortunately, since OMGPOP is a private company it is a little hard to find out financial information about the firm. From what I have read, the company has a subscription type of system for its games which are pretty popular. This could mean that the company, although has a hit with “Draw Something”, is yielding nice numbers from its other games. We will have to wait till 3pm ET to find out the true details about the deal and get a better idea on the valuation of OMGPOP o determine whether $200 million is too much, too little or just right.

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