Why is Zynga’s Founder Dumping Shares?
Zynga’s (NASDAQ:ZNGA) chief executive will sell 15 percent of his stock in a secondary offering the company announced on Friday. Zynga is preparing to issue new stock worth 43 million shares to raise new capital.
Chief executive Mark Pincus, the largest shareholder in the social-gaming company, will sell stock valued at about $227 million based on Thursday’s closing price of $13.74. The sale will bring his total share in the company down from 36.5 percent to 35.9 percent.
Other large investors, including IVP (NSE:IVP), SilverLake, Union Square Ventures, Google (NASDAQ:GOOG), and LinkedIn (NYSE:LNKD) chairman Reid Hoffman, are also selling. Employees, who had been under a lock-up period in order to maintain the price of the stock, will also be allowed to sell shares. Approximately 114,000,000 shares will be released from lock-ups. However, employees won’t be able to sell before the last week of April, when the company files its first-quarter earnings.
Zynga also announced in its filing with the Securities and Exchange Commission that it spent $180 million on the acquisition of OMGPOP, the maker of the popular mobile game “Draw Something” earlier this week.
Zynga had raised $1 billion in its initial public offering in December. Share prices fell 3 percent to $13.35 in morning trading on Friday. Shares had gained 46 percent this year.
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