Zynga Inc Acquires NaturalMotion For $527M, Announces Job Cuts

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Zynga Inc (NASDAQ:ZNGA) announced its decision to acquire NaturalMotion, a mobile video games and animation technology company for $527 million, and to reduce its work force.

Under the agreement, the company will pay $391 million in cash and 40 million ZNGA shares to acquire NaturalMotion.

Access to important technologies

According to Don Mattrick, chief executive officer of Zynga Inc (NASDAQ:ZNGA), the acquisition will allow the company to access important technologies as it tries to accelerate its growth in the mobile space. In addition, the workforce reduction is intended to restructure the company into the right size.

Some of the games created by NaturalMotion include CSR Racing, a car drag-strip title, and Clumsy Ninja, a game that allows players to train their characters to become masters of martial arts.

According to Mattrick, Zynga Inc (NASDAQ:ZNGA) bought NaturalMotion because of its Euphoria technology. The company has the ability to create realistic body movements for characters, and it is licensed to popular games and movies.

According to the company, it will continue licensing NaturalMotion’s technology, but it will retain the exclusive use of the mobile game Clumsy Ninja.

Better results with smaller team

Zynga Inc (NASDAQ:ZNGA) is eliminating 15% or 314 employees. According to the company, the employees that will be affected are those working in the management, support, and maintenance. Mattrick said, “We’ve reset the company at an executive level.”

Since becoming chief executive officer, Mattrick has focused his efforts on reducing the number of projects of Zynga Inc (NASDAQ:ZNGA) that are under development and eliminating bureaucracy, according to people with knowledge about the initiative of the company.

Mattrick also concentrated the company’s efforts in developing competitive mobile games because he believes that it is critical for its return to profitability.

“The category growth in mobile, with smartphones and tablets is just substantial. We imagine we can achieve better results with smaller teams,” said Mattrick.

Zynga Inc (NASDAQ:ZNGA) also said that it will make sure that 75% of its new games will be available in mobile devices.

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