Zynga Inc. Looks To Raise $925 Million In IPO

Zynga Inc. could raise $925 million, in what is one of the largest and most hotly anticipated Internet IPO’s in years. The Facebook game maker plans to sell 100 million shares, or 14.3% of the company, at $8.50 to $10 per share, according to a regulatory filing on Friday.

Zynga’s debut follows on the heels of IPO’s by Groupon Inc. (NASDAQ:GRPN) and LinkedIn Coroporation (NYSE:LNKD). Based on the midpoint of Zynga’s price range, the company could raise $925 million. It had filed in July to raise up to $1 billion.

The IPO would value the 5-year-old company, which made its name on viral games such as “FarmVille,” at a range $7.7 billion to $9.04 billion, based on 904 million fully diluted shares, which catapults it to the top of the U.S. game industry. Excluding stock options and based on 699 million shares, the company values itself as high as $7.1 billion.

Rival game-makers Electronic Arts Inc. (NASDAQ:ERTS) has a market value of $7.73 billion, while Activision Blizzard Inc. (NASDAQ:ATVI) has a market value of $14.21 billion.

Mark Pincus, a serial entrepreneur before he founded Zynga, will hold a class of shares with 70 times more voting power than the regular stock that will be sold in the offering.

Google, one of the early investors in Zynga, will be offering about 1.7 million shares, according to a regulatory filing. Other companies selling shares include Institutional Venture Partners and Union Square Ventures.

Zynga was founded in 2007 and has been riding the wave of Facebook’s growth and the popularity of lightweight social games, which are free to play. In those games, such as FarmVille and CityVille, users play for free and pay real money for virtual goods.

Zynga reported net income of $12.5 million in the third quarter ended Sept. 30, down 54% from $27 million a year ago, according to an updated S1 filing with the Securities and Exchange Commission.

Revenue was $307 million in the quarter, up 80% from $170.6 million a year ago. In the second quarter, Zynga reported only $1.4 million in profits on $280 million in revenue, so the third quarter report is an improvement on a quarter-to-quarter basis.