Zynga soars 49% on Take-Two deal to buy the FarmVille creator for $12.7 billion

• Zynga stock jumped 49% Monday on a takeover deal by video game publisher Take-Two Interactive.
• The $12.7 billion agreement will see Take-Two buying Zynga with a combination of cash and stock.
• Shares of Zynga, whose social games include "Word With Friends," had started 2022 by losing ground.

Zynga stock rocketed up nearly 50% Monday on a takeover agreement by "Grand Theft Auto" publisher Take-Two Interactive that values the social games maker at $12.7 billion in a cash-and-stock deal.

Take-Two ​​will buy Zynga's outstanding shares for $9.86 apiece, including $3.50 in cash and $6.36 in Take-Two common stock, the companies said in a joint statement. The agreement represents a 64% premium to Zynga's share price at the close of January 7.

The deal is expected to close by the end of June 30, during the first quarter of Take-Two's fiscal year 2023. The agreement has a "go-shop" provision, giving Zynga and its board to February 24 to actively solicit, receive, and potentially enter negotiations with parties that offer other deal proposals.

Zynga jumped as much as 49% to $8.91 shortly after trading began in the regular session. The stock had been down by about 6% so far in 2022. Take-Two shares dropped by 13%.

Zynga's titles include "Words With Friends," "Harry Potter: Puzzles & Spells" and "Zynga Poker," with the transaction set to merge the company with the publisher of "NBA 2K," "BioShock" and "Red Dead Redemption," among other titles.

"This strategic combination brings together our best-in-class console and PC franchises, with a market-leading, diversified mobile publishing platform that has a rich history of innovation and creativity," said Strauss Zelnick, Take-Two's chairman and CEO, in the statement.

He said the deal will deliver "significant value" to shareholders in Take-Two and in Zynga, including $100 million of annual cost synergies within the first two years of the deal closing, and the potential of at least $500 million of annual net bookings over time.