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SAN FRANCISCO–(BUSINESS WIRE)–Zynga Inc. (Nasdaq: ZNGA), a global leader in interactive entertainment,
today announced the pricing of $600 million aggregate principal amount
of 0.25% convertible senior notes due 2024 (the “notes”) in a private
placement to qualified institutional buyers pursuant to Rule 144A under
the Securities Act of 1933, as amended (the “Securities Act”). Zynga
also granted the initial purchasers of the notes a 13-day option to
purchase up to an additional $90 million aggregate principal amount of
the notes. The sale of the notes is expected to close on June 14, 2019,
subject to customary closing conditions.

The notes will be senior unsecured obligations of Zynga and will accrue
interest payable semiannually in arrears on June 1 and December 1 of
each year, beginning on December 1, 2019, at a rate of 0.25% per
year. The notes will mature on June 1, 2024, unless earlier converted,
repurchased or redeemed. The initial conversion rate will be 120.3695
shares of Zynga’s Class A common stock (“common stock”)
per $1,000 principal amount of notes (equivalent to an initial
conversion price of approximately $8.31 per share of common stock). The
initial conversion price of the notes represents a premium of
approximately 32.5% over the last reported sale price of Zynga’s common
stock on the Nasdaq Global Select Market on June 11, 2019. The notes
will be convertible into cash, shares of Zynga’s common stock or a
combination of cash and shares of Zynga’s common stock, at Zynga’s
election.

Zynga may redeem the notes, at its option, on or after June 5, 2022, if
the last reported sale price of Zynga’s common stock has been at least
130% of the conversion price then in effect for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading-day
period (including the last trading day of such period) ending on and
including the trading day immediately preceding the date on which Zynga
provides notice of redemption at a redemption price equal to 100% of the
principal amount of the notes to be redeemed, plus accrued and unpaid
interest to, but excluding, the redemption date.

If a “fundamental change” (as defined in the indenture governing the
notes) occurs at any time prior to the maturity date, holders of the
notes may require Zynga to repurchase for cash all or any portion of
their notes at a repurchase price equal to 100% of the principal amount
of the notes to be repurchased, plus accrued and unpaid interest. In
addition, following certain corporate events or if Zynga issues a notice
of redemption, Zynga will, under certain circumstances, increase the
conversion rate for holders who convert their notes in connection with
such corporate event or notice of redemption.

Zynga estimates that the net proceeds from the offering will be
approximately $584.5 million (or $672.3 million if the initial
purchasers exercise their option to purchase additional notes in full),
after deducting the initial purchasers’ discounts and estimated offering
expenses payable by Zynga. Zynga intends to use a portion of the net
proceeds to pay the cost of the capped call transactions described
below. Zynga intends to use the remainder of the net proceeds for
working capital and other general corporate purposes, which may include
capital expenditures, the repayment of debt, and potential acquisitions
and future transactions. However, it has not designated any specific
uses and has no current agreements with respect to any material
acquisition or strategic transaction.

In connection with the pricing of the notes, Zynga entered into capped
call transactions with one or more of the initial purchasers and/or
their respective affiliates (the “option counterparties”). The capped
call transactions are expected generally to reduce potential dilution to
Zynga’s common stock upon any conversion of notes and/or offset any cash
payments Zynga is required to make in excess of the principal amount of
converted notes, as the case may be, with such reduction and/or offset
subject to a cap initially equal to $12.54 per share (which represents a
premium of 100% over the last reported sale price of Zynga’s common
stock on the Nasdaq Global Select Market on June 11, 2019), subject to
certain adjustments under the terms of the capped call transactions. If
the initial purchasers exercise their option to purchase additional
notes, Zynga expects to enter into additional capped call transactions
with the option counterparties.

Zynga expects that, in connection with establishing their initial hedges
of the capped call transactions, the option counterparties or their
respective affiliates may enter into various derivative transactions
with respect to Zynga’s common stock and/or purchase shares of Zynga’s
common stock concurrently with or shortly after the pricing of the
notes. This activity could increase (or reduce the size of any decrease
in) the market price of Zynga’s common stock or the notes at that time.

In addition, Zynga expects that the option counterparties or their
respective affiliates may modify their hedge positions by entering into
or unwinding various derivatives with respect to Zynga’s common stock
and/or purchasing or selling Zynga’s common stock or other securities of
Zynga in secondary market transactions following the pricing of the
notes and prior to the maturity of the notes (and are likely to do so
during any observation period related to a conversion of notes). This
activity could also cause or prevent an increase or a decrease in the
market price of Zynga’s common stock or the notes, and to the extent the
activity occurs during any observation period related to a conversion of
notes, this could affect the value of the consideration that a
noteholder will receive upon conversion of its notes.

Neither the notes, nor any shares of Zynga’s common stock potentially
issuable upon conversion of the notes, have been, nor will be,
registered under the Securities Act or any state securities laws and,
unless so registered, such securities may not be offered or sold in the
United States absent registration or an applicable exemption from, or in
a transaction not subject to, the registration requirements of the
Securities Act and other applicable securities laws.

This press release is neither an offer to sell nor a solicitation of an
offer to buy any securities, nor shall it constitute an offer,
solicitation or sale of the securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration
or qualification under the securities laws of any such jurisdiction.

Contacts

Investor Relations:
Rebecca Lau
[email protected]

Press:
Sarah Ross
[email protected]