Zynga Prices $515M Secondary Offering At $12 Per Share

Next Story

Not All Markets Are Created Equal

As reported previously, social gaming giant Zynga is holding a secondary offering of its shares. The company just announced the pricing, which is $12 per share, for 42,969,153 shares. All of the shares will be sold by existing stockholders, says the company, and Zynga will not receive any proceeds from the sale of shares.

Zynga revealed in an S-1 filing from last week that CEO Mark Pincus will sell 15 percent of his shares, and his voting power post-sale will go from 36.5 percent to 35.9 percent. Investors IVP, SilverLake, Union Square Ventures, Google, and Reid Hoffman are also selling in the offering, as is board member Jeffrey Katzenberg. Owen Van Natta, General Counsel Reggis Davis, COO John Schappert and CFO Dave Wehner are selling shares as well.

The reason for the offering is that Zynga is trying to manage the lock-up period for employees that could negatively affect the company’s share price. The company says it’s doing this to “facilitate an orderly distribution of shares and to increase the company’s public float,” basically trying to avoid a situation that has happened to other companies with recent initial public offerings. Employees would dump stock all at the same time, and share prices would plummet as a result. While Zynga’s plan gives investors and executives a way to liquidate relatively early, the fact that it locks them up for so long will also make it easier for employees to sell at higher prices.

In a statement released this evening, Zynga said: As part of the offering, all selling stockholders, as well as all officers and directors, have agreed to lock-up agreements that extend the transfer restrictions on their shares until at least 90 days following the offering. The principal purposes of the offering are to facilitate an orderly distribution of shares and to increase the company’s public float. Zynga will not receive any proceeds from the sale of shares in this offering.

It’s worth noting that Zynga’s pricing is slightly below the current market value of the company’s shares, which is $12.31. Perhaps Zynga is just rounding down, and being conservative in its pricing. Zynga priced at $10 per share at the time of IPO in December.