Zynga has just released a new S-1 in connection with its secondary offering. Among the details: a confirmation of the $180 million sale price for OMGPOP that we’d heard earlier this week, and new details about how the company is planning to let employees sell shares bit by bit.
First, about those shares. The company is looking to sell up to 43 million shares (42,969,153 shares to be exact). Zynga’s CEO Mark Pincus will sell 15 percent of his shares, which is worth around $227 million based on yesterday’s stock price. Pincus’ voting power post-sale will go from 36.5 percent to 35.9 percent, according to the filing.
Investors IVP, SilverLake, Union Square Ventures, Google, 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 (see chart below).
Other employees (larger shareholders) who hold an aggregate of approximately 114,000,000 shares will be released from lock-ups to allow them to sell shares, on closing of the offering. But these employees will still be subject to a blackout period and won’t be able to sell until after the company’s first quarter earnings release in the last week of April.
As we reported a few weeks ago, 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.
Another interesting tidbit from the filing: we know Zynga bought OMGPOP, the maker of massive Pictionary-like hit Draw Something, as the company announced this week. In the filing, Zynga states that it bought the game developer for a “purchase consideration of approximately $180 million in cash.” On Wednesday, we’d heard that OMGPOP was sold for $180 million plus $30 million in earnout. It’s possible that the $30 million may be just be retention for the startup’s employees, which is why it is not mentioned in the filing.
The company also said that its top three games accounted for 83%, 78% and 57% of its online game revenue in 2009, 2010 and 2011, respectively.
Zynga’s share price closed at $13.74 in yesterday’s trading.