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Why Zynga May Put Its San Francisco Building on the Block

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Apr. 8 2019, Published 2:18 p.m. ET

Company looking to increase cash reserves

Zynga (ZNGA) exited 2018 with $581 million in cash, but the company isn’t satisfied with this amount and wants to increase it. Its reasons for wanting to increase its cash reserves include its plans to drive growth through acquisitions.

In January this year, Zynga completed its purchase of mobile games developer Small Giant Games for close to $600 million. Zynga has bought six companies since 2016, according to Crunchbase data. Zynga has been more active in the merger deals space than many of its major industry peers in recent years, further highlighting its strong appetite for a more robust growth rate.

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Options include property sale and debt financing

Zynga has identified several avenues to help it boost its cash reserves and increase its financial flexibility as it pursues more acquisitions. For example, the company is exploring the sale of its building in San Francisco. Zynga has yet to disclose what it expects the building would fetch if it were put on the block, but it may lease the building back after selling it.

In addition to selling some of its assets to boost its cash reserves, Zynga is also considering debt financing alternatives for its projects. It financed part of Small Giant Games’ purchase price through debt.

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