Turkey’s Unicorn gallops off to the FarmVille in the Cloud: Peak Games sold for $1.8bn

June 29, 2020

2 min read

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What's going on here?

Zynga Inc, the creator of games such as FarmVille, has agreed to buy Turkish game maker Peak Games for $1.8bn, making the purchase its biggest acquisition ever.

What does this mean?

The gaming industry has benefited immensely from the lockdown measures as confinement has increased demand for video games. The deal represents an example of how tech companies are taking advantage of the market turmoil created by the coronavirus pandemic through mergers and acquisitions (M&A).

Peak Games is an Istanbul-based game maker of popular puzzles such as Toy Blast and Toon Blast, which rank among the top 10 highest-grossing mobile games. Frank Gibeau, Zynga’s chief executive, stated that the Turkish firm was a “very sought-after asset” by both Zynga and its competitors. He noted that Zynga already had a good relationship with Peak dating back to 2017 when it bought a mobile-based card games business from the game maker for $100m. 

The acquisition is expected to attract millions of players to Zynga’s portfolio and boost its position in the profitable puzzle market.

What's the big picture effect?

Let’s explore the rationale behind the acquisition. 

The acquisition represents the largest-ever sale of a Turkish start-up. It makes Peak the country’s first “unicorn” tech company (a start-up worth over $1bn). This is a huge deal for Turkey’s tech ecosystem and a testament to the talent that is being developed in its market. Strategy director at Peak Games, Omer Inonu, stated that Istanbul has become “one of Europe’s most important games development centres”.

Turkey’s talent pool in the tech sector is a real asset. The expertise of Peak’s developers can boost Zynga’s human capital and in-house development of mobile development. Furthermore, the acquisition is expected to increase Zynga’s daily average users by more than 60%, representing a drastic revenue growth. Mr Gibeau added that in the second half of the year, Peak could add $300m to Zynga’s bookings. This is also a valuable opportunity for Zynga to expand its international presence to the Japanese market. Peak’s  main international business activity outside the US comes from Japan, which represents a strategic growth opportunity for Zynga. 

Another exciting aspect of this deal is that it was completed entirely through Zoom. In what could only be described as the “new normal”, due diligence for the deal was conducted entirely online, potentially creating a paradigm for how M&A can be completed remotely. There has been a “subtle softening” of global M&A activity since the end of the fourth quarter of 2019, followed by a 35.5% decrease in M&A volume in the first quarter of 2020, representing an all-time low since 2013 (research by Dealogic). 

 As remote working has become the norm, it is interesting to see how deals adapt to the virtual, decentralised world. Is Zoom the future of M&A?

Report written by Selin Alagoun

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