Zynga founder Mark Pincus claims he nearly bought Supercell for $400m

Zynga founder Mark Pincus has revealed that the company came close to acquiring Supercell for $400m in 2012, before its board blocked the deal.

Speaking on the Deconstructor of Fun podcast, Pincus said he had a “handshake” agreement with Supercell CEO Ilkka Paananen to buy the studio, but that Zynga’s board refused to approve it after the company’s earlier $200m acquisition of OMGPOP and Draw Something had failed to pay off.

“I had a moment in 2012 where I still had voting control of the company. I had a handshake with Ilkka [Paananen] to buy Supercell for $400m in cash and went to my board. They were grumpy and they said, until you prove you can manage what you have, we don’t want you to buy anything else,” Pincus said. “I bought OMGPOP, Draw Something and that had ended up being a failure. We only wasted $200m. Now, $400m. I had the chance to buy the winning hand.”

At the time, Supercell’s Hay Day was outperforming Zynga’s own games, Pincus said – “Hay Day was eating our lunch” – and Clash of Clans, which had only just launched, was already climbing the charts.

Pincus said Zynga’s lawyer told him that exercising his voting control to force the deal through would mean firing the entire board and replacing it with his own appointees, risking a personal lawsuit.

“He said, you could do this, but to exercise your voting control, you’d have to fire everyone on the board, replace them with your own people, and then you would be sued personally,” Pincus said. “Elon would have done that. Elon has much bigger balls than I have. I wish I had more conviction. I wish I had bigger balls. I think I do today. I wish I had more confidence as a founder and CEO to go against the grain and fire my fucking board for being idiots. And I didn’t want to fight them or Wall Street. And I went along with it to the detriment of everybody.”

Supercell posted $500m in net profit the following year, Pincus said. He added that when he later stepped down as CEO, his successor’s first move was to seek board approval for a $550m acquisition of a company he described as having “no revenues, no hit games.” “And my board said, great, we believe in you,” Pincus said.

Pincus didn’t name the company, but the figure and timing line up with Zynga’s 2014 purchase of NaturalMotion under then-CEO Don Mattrick, reported at the time as a $527m deal.
Pincus returned as CEO in 2015, when Zynga had around $1bn in cash. He said he spent $800m of that on stock buybacks, at roughly $2.20 a share, which he called a good investment given Zynga was later bought by Take-Two for around $10 a share.

But he said the buyback period also came at the expense of other investments he could have made.

“There were so many other good investments that I could have done at the time. And didn’t, because I was playing defense. I was licking wounds, I was playing defense. I was not my best CEO self,” Pincus said.

Pincus said hiring Frank Gibeau, who went on to lead a series of acquisitions, was “a good move,” building what became a $12bn company. But he argued Zynga could have gone much further.

“We had the chance to build the biggest game company in the world,” he said. “There’s no game companies with any fucking vision today. There wasn’t then. Tencent, the only big game company. There still is not a single Western world game company with a market cap over $100bn. And I thought by now there’d be five or six. And there’s just no fucking vision in the industry. There’s no innovation. They’re all just playing defense.”