Zynga headquarters sale is ‘dry powder’ for M&A, says analyst
Shares of Zynga Inc. ZNGA, +1.32% are up 2.3% in midday trading Tuesday after the company announced that it had agreed to sell its corporate headquarters with a leaseback provision. The deal, which is expected to close in July, carries a net cash benefit of about $600 million. Piper Jaffray analyst Michael Olson called the deal "dry powder" for future M&A. "We believe the primary use of cash will be potential acquisitions of smaller studios that can complement the Zynga portfolio," he wrote. "However, we are not anticipating a major, transformative acquisition, but instead, opportunities similar to its recent spate of purchases." Olson rates the stock at overweight. Zynga shares have gained 58% so far this year, as the S&P 500 SPX, -0.32% has risen 13%.
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