Blog Coverage Take-Two Acquires Privately Held Social Point; Plans to Expand within Free-To-Play Industry

Upcoming AWS Coverage on Electronic Arts Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 2, 2017 / Active Wall St. blog coverage looks at the headline from Take-Two Interactive Software, Inc. (NASDAQ: TTWO) as the Company announced on February 01, 2017, an agreement where it has acquired privately-held Social Point S.L. for $250 million. The payout is structured in the form of $175 million in cash and 1,480,168 unregistered shares of Take-Two’s common stock along with an additional potential earn-out consideration of up to an aggregate of $25.9 million in cash and shares of Take-Two’s common stock. Register with us now for your free membership and blog access at:

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One of Take-Two Interactive Software’s competitors within the Multimedia & Graphics Software space, Electronic Arts Inc. (NASDAQ: EA), announced on January 31, 2017, its preliminary financial results for its third fiscal quarter ended December 31, 2016. AWS will be initiating a research report on Electronic Arts in the coming days.

Today, AWS is promoting its blog coverage on TTWO; touching on EA. Get all of our free blog coverage and more by clicking on the link below:

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Breaking down the Agreement

The acquisition of Social Point diversifies Take-Two’s strategic reach in the free-to-play gaming industry. Social Point, founded in 2008 and headquartered in Barcelona, Spain is the maker of the games such as Dragon City, Monster Legends, Social Wars, Social Empires, and World Chef. Social Point is basically a social network game developer where it first started by making free online games for Facebook. The Company’s two most popular titles, Dragon City and Monster Legends, have achieved close to 200 million downloads on the IOS and Android platforms.

The payout is structured in the form of $175 million in cash and the rest $75 million in 1,480,168 unregistered shares of Take-Two’s common stock. Take-Two entered into a registered rights agreement subject to which it agreed to register the shares issued for resale. Take-Two funded the cash payments from cash on hand. The founders of Social Point, Horacio Martos and Andres Bou, will continue to be part of the acquired Company and are eligible to receive earn-out consideration of approximately $25.9 million in cash and shares of Take-Two’s common stock, depending upon Social Point’s EBITDA targets over the 12- and 24-month periods.

The Free-To-Play Gaming Industry

Take-Two is the leading developer and marketer of PC and mobile games along with several well-known titles including the Grand Theft Auto series. The Company operates through its two wholly-owned labels, Rockstar Games and 2K. This agreement is viewed as a strategic extension of the Company in the free-to-play business model. The model first originated in the early 2000s in South Korea. According to a report, the total market size for this sector was estimated at $40 billion in 2016.

Take-Two’s Position on the Merger

The acquisition is expected to be immediately accretive to net revenue and net cash provided by operations and will be accretive to net income per share, slashing out the transaction costs and amortization of intangible assets in the fiscal year, ending March 31, 2018. The portfolio derived from Social Point is highly complementary to Take-Two’s core game business. The acquired company has several exciting games up its development pipeline. Social Point has been consistently on a growth spree since 2013 and has grown net revenue at 29% CAGR from 2013 to 2016. For the trailing 12-months period ending December 31, 2016, Social Point generated net revenue of $90.8 million and EBITA of $19.9 million.

Stock Performance

On Wednesday, February 01, 2017, the stock closed the trading session at $54.36, rising 1.32% from its previous closing price of $53.65. A total volume of 1.75 million shares have exchanged hands, which was higher than the 3-month average volume of 1.40 million shares. Take-Two Interactive’s stock price surged 22.46% in the last three months, 35.32% in the past six months, and 62.56% in the previous twelve months. Moreover, the stock surged 10.29% since the start of the year. The stock currently has a market cap of $4.71 billion.

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