Zynga Shareholders Hit Eject Button
Zynga’s (NASDAQ:ZNGA) secondary offering will be priced at $12 per share, for nearly 43 million shares, all of which will be sold by existing stockholders, says the company. Zynga will not receive any proceeds from the sale of shares.
Last week, Zynga revealed in an S-1 filing that CEO Mark Pincus will sell 15 percent of his shares, and his voting power after the sale will drop from 36.5 percent to 35.9 percent. Google (NASDAQ:GOOG), IVP, SilverLake, Union Square Ventures, and Reid Hoffman, co-founder of LinkedIn (NYSE:LNKD) are also selling shares in the offering, as is board member Jeffrey Katzenberg, CEO of DreamWorks Animation (NASDAQ:DWA).
The secondary offering is Zynga’s attempt to manage the lock-up period for employees, which could negatively impact the company’s share price. Employees have been known to dump stock all at the same time as the lock-up period proceeding a company’s IPO comes to an end, causing share prices to plummet.
Zynga’s plan gives investors and executives a chance to liquidate relatively early, but also requires all selling stockholders to accept a lock-up agreement that extends the transfer restrictions on their shares until at least 90 days following the offering. The plan will also make it easier for employees to sell shares at higher prices.
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