Zynga Seek $1B in Biggest Web IPO# Stock
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Zynga Inc. is seeking to raise as much as $1 billion in the biggest initial
public offering by a U.S. Internet company since Google Inc. (GOOG)
The company is offering 100 million shares for $8.50 to $10 apiece,
according to a regulatory filing today. The high end of the range would
value San Francisco-based Zynga, the biggest developer of games for Facebook
Inc., at $7 billion.
Zynga had originally planned a larger IPO, scaling back after Internet
companies including Groupon Inc. and Pandora Media Inc. sank following their
debuts this year, a person familiar with the plans said yesterday. Zynga is
selling about 14 percent of its common stock, a larger portion than some
Web companies have sold this year in offerings.
"It's a reflection of what we've seen in Groupon," said David Dillon, a San
Francisco-based portfolio manager at HighMark Capital Management, which
oversees about $17 billion. "If you price yourself too high, you do yourself
a disservice in the long term."
The top end of Zynga's price range would value the company at 6.8 times
trailing 12-month sales, according to the filing. Game maker Electronic Arts
Inc. (ERTS) had a market value of $7.73 billion at yesterday's close, or
about 2 times sales in the same period, Bloomberg data show.
Facebook IPO?
Facebook may raise about $10 billion in an IPO next year that would value
the world's largest social-networking site at more than $100 billion, a
person with knowledge of the matter said Nov. 29. Google, operator of the
world's biggest search engine, raised $1.9 billion in its 2004 IPO,
including an over- allotment option.
Venture backer Avalon Ventures, based in La Jolla, California, is selling
the largest portion of Zynga at more than 2.5 million shares, or about 7
percent of its stake. Founder and Chief Executive Officer Mark Pincus, who
isn't selling any shares in the offering, will have about 37 percent voting
control once the offering is complete.
Foundry Group and Institutional Venture Partners also are each selling about
2.5 million shares, while Union Square Ventures is offering 2.2 million.
Venture firm Kleiner Perkins Caufield & Byers, Zynga's biggest shareholder
after Pincus, isn't selling shares in the IPO.
Google and buyout firm Silver Lake are trimming their stakes by about 1.7
million shares each. Mail.ru Group Ltd. and Digital Sky Technologies, both
managed by Russian billionaire Yuri Milner, are selling more than 1 million
shares combined. Investment firm Tiger Global Management is offering about
554,000 shares.
Popular Games
Zynga aims to capitalize on the popularity of social networks and virtual
goods. The company lets users play games for free and then makes money by
selling items, such as a townhouse in "CityVille" or a shipyard in "Empires
& Allies."
Founded in 2007, Zynga has hired Morgan Stanley and Goldman Sachs Group Inc.
(GS) to manage the IPO. Zynga's shares will trade on the Nasdaq Stock
Market under the symbol ZNGA.
About 6.7 million of Zynga users were paying customers in the first nine
months of the year, up from 5.1 million in the year-earlier period,
according to the filing. Revenue more than doubled to $828.9 million. The
worldwide virtual-goods market will more than double to $22.5 billion in
2015 from $9.27 billion last year, according to Lazard Capital Markets.
In October, Zynga announced a new service, called Project Z, geared toward
reducing its dependence on Facebook users. The company also introduced new
games, including "Zynga Bingo" and "Hidden Chronicles."
Diversifying
Ninety-three percent of Zynga's third-quarter revenue was generated on
Facebook, the world's most popular social network. That number has ranged
from 91 percent to 94 percent since the beginning of last year, according to
Zynga filings.
Adding more mobile games is part of Zynga's plan to diversify. The company
said in November that the number of daily active users on mobile devices
increased more than 10-fold from November 2010 to September 2011, reaching 9
.9 million. By October, the number was 11.1 million.
Sunil Paul, a founding partner of venture capital firm Spring Ventures,
recently joined Zynga's board. Paul, who started software companies
Brightmail Inc. and FreeLoader, was brought on because of "his extensive
experience with Internet companies," Zynga said on Nov. 17.
Groupon's Offering
Groupon went public earlier this month, helping revive the IPO market after
the European debt crisis and stock-market volatility hampered deals. The
shares of the Chicago-based company, which leads the Internet-coupon
industry, have dropped 5.3 percent through yesterday.
Angie's List, a site that rates plumbers, contractors and other service
providers, has seen its shares decline 3.5 percent since their debut on the
Nasdaq on Nov. 17.
Yelp Inc., which features user reviews of restaurants and businesses, also
is planning an IPO. The San Francisco-based company filed on Nov. 17 to
raise as much as $100 million in a 2012 offering. The $100 million amount is
typically used as a placeholder to calculate fees and may change.
To contact the reporters on this story: Douglas MacMillan in San Francisco
at d*********[email protected]; Brian Womack in San Francisco at [email protected]
bloomberg.net; Lee Spears in New York at l******[email protected]
To contact the editors responsible for this story: Tom Giles at [email protected]
bloomberg.net; Jennifer Sondag at j*****[email protected]
public offering by a U.S. Internet company since Google Inc. (GOOG)
The company is offering 100 million shares for $8.50 to $10 apiece,
according to a regulatory filing today. The high end of the range would
value San Francisco-based Zynga, the biggest developer of games for Facebook
Inc., at $7 billion.
Zynga had originally planned a larger IPO, scaling back after Internet
companies including Groupon Inc. and Pandora Media Inc. sank following their
debuts this year, a person familiar with the plans said yesterday. Zynga is
selling about 14 percent of its common stock, a larger portion than some
Web companies have sold this year in offerings.
"It's a reflection of what we've seen in Groupon," said David Dillon, a San
Francisco-based portfolio manager at HighMark Capital Management, which
oversees about $17 billion. "If you price yourself too high, you do yourself
a disservice in the long term."
The top end of Zynga's price range would value the company at 6.8 times
trailing 12-month sales, according to the filing. Game maker Electronic Arts
Inc. (ERTS) had a market value of $7.73 billion at yesterday's close, or
about 2 times sales in the same period, Bloomberg data show.
Facebook IPO?
Facebook may raise about $10 billion in an IPO next year that would value
the world's largest social-networking site at more than $100 billion, a
person with knowledge of the matter said Nov. 29. Google, operator of the
world's biggest search engine, raised $1.9 billion in its 2004 IPO,
including an over- allotment option.
Venture backer Avalon Ventures, based in La Jolla, California, is selling
the largest portion of Zynga at more than 2.5 million shares, or about 7
percent of its stake. Founder and Chief Executive Officer Mark Pincus, who
isn't selling any shares in the offering, will have about 37 percent voting
control once the offering is complete.
Foundry Group and Institutional Venture Partners also are each selling about
2.5 million shares, while Union Square Ventures is offering 2.2 million.
Venture firm Kleiner Perkins Caufield & Byers, Zynga's biggest shareholder
after Pincus, isn't selling shares in the IPO.
Google and buyout firm Silver Lake are trimming their stakes by about 1.7
million shares each. Mail.ru Group Ltd. and Digital Sky Technologies, both
managed by Russian billionaire Yuri Milner, are selling more than 1 million
shares combined. Investment firm Tiger Global Management is offering about
554,000 shares.
Popular Games
Zynga aims to capitalize on the popularity of social networks and virtual
goods. The company lets users play games for free and then makes money by
selling items, such as a townhouse in "CityVille" or a shipyard in "Empires
& Allies."
Founded in 2007, Zynga has hired Morgan Stanley and Goldman Sachs Group Inc.
(GS) to manage the IPO. Zynga's shares will trade on the Nasdaq Stock
Market under the symbol ZNGA.
About 6.7 million of Zynga users were paying customers in the first nine
months of the year, up from 5.1 million in the year-earlier period,
according to the filing. Revenue more than doubled to $828.9 million. The
worldwide virtual-goods market will more than double to $22.5 billion in
2015 from $9.27 billion last year, according to Lazard Capital Markets.
In October, Zynga announced a new service, called Project Z, geared toward
reducing its dependence on Facebook users. The company also introduced new
games, including "Zynga Bingo" and "Hidden Chronicles."
Diversifying
Ninety-three percent of Zynga's third-quarter revenue was generated on
Facebook, the world's most popular social network. That number has ranged
from 91 percent to 94 percent since the beginning of last year, according to
Zynga filings.
Adding more mobile games is part of Zynga's plan to diversify. The company
said in November that the number of daily active users on mobile devices
increased more than 10-fold from November 2010 to September 2011, reaching 9
.9 million. By October, the number was 11.1 million.
Sunil Paul, a founding partner of venture capital firm Spring Ventures,
recently joined Zynga's board. Paul, who started software companies
Brightmail Inc. and FreeLoader, was brought on because of "his extensive
experience with Internet companies," Zynga said on Nov. 17.
Groupon's Offering
Groupon went public earlier this month, helping revive the IPO market after
the European debt crisis and stock-market volatility hampered deals. The
shares of the Chicago-based company, which leads the Internet-coupon
industry, have dropped 5.3 percent through yesterday.
Angie's List, a site that rates plumbers, contractors and other service
providers, has seen its shares decline 3.5 percent since their debut on the
Nasdaq on Nov. 17.
Yelp Inc., which features user reviews of restaurants and businesses, also
is planning an IPO. The San Francisco-based company filed on Nov. 17 to
raise as much as $100 million in a 2012 offering. The $100 million amount is
typically used as a placeholder to calculate fees and may change.
To contact the reporters on this story: Douglas MacMillan in San Francisco
at d*********[email protected]; Brian Womack in San Francisco at [email protected]
bloomberg.net; Lee Spears in New York at l******[email protected]
To contact the editors responsible for this story: Tom Giles at [email protected]
bloomberg.net; Jennifer Sondag at j*****[email protected]