Summary of the combined company projections prepared by Zynga

Summary of the combined company projections prepared by Zynga

The following table presents a summary of the combined company projections prepared by Zynga, which consist of certain unaudited prospective financial information for the combined company’s fiscal years 2023 through 2027 on a pro forma basis for the combination that were prepared by Zynga management, based on (i) the prospective financial information for Zynga’s fiscal years 2022 through 2024 included in the Zynga standalone projections as of December 2021, as extrapolated by Zynga management for Zynga’s fiscal years 2025, 2026, and 2027, and then converted to Take-Two’s fiscal years, (ii) the Take-Two standalone projections provided by Take-Two management to Zynga for fiscal years 2022 through 2025, as extrapolated by Zynga management, for Take-Two’s fiscal years 2026 and 2027; and (iii) the synergy projections provided by Take-Two management to Zynga, with Zynga management’s assumption of an estimated 50% phase-in of annual cost synergies by the combined company in Take-Two’s fiscal year 2023 and an estimated $50 million in restructuring costs of the combined company incurred to achieve the synergy projections in Take-Two’s fiscal year 2023. The combined company projections prepared by Zynga, including the extrapolations of the Zynga standalone projections as of December 2021 and Take-Two standalone projections, as well as the adjustments to the synergy projections assumed by Zynga management, were prepared by Zynga management for Goldman Sachs’ use in connection with its opinion delivered to the Zynga board of directors and related financial analyses, as described further in the section titled “The Combination—Opinion of Zynga’s Financial Advisor.”

The combined company projections prepared by Zynga were not provided to Take-Two nor to Take-Two’s financial advisors, LionTree and J.P. Morgan. Except for Zynga management’s use of the Take-Two standalone projections and the synergy projections as described above, the combined company projections prepared by Zynga do not reflect the input of Take-Two management. In particular, without input from Take-Two’s management, Zynga’s management extrapolated Take-Two’s standalone projections for fiscal years 2026 and 2027 for use in the combined company projections based on assumptions Zynga made with respect to Take-Two’s standalone projections for fiscal years 2023 through 2025.

The combined company projections prepared by Zynga do not take into account the potential effects of the combination, including the expenses that have been and may be incurred in connection with the combination or the consummation thereof, the payment of the cash portion of the aggregate merger consideration by the combined company and any financing arrangements related to the combination, or any changes to the combined company’s operations or strategy that may be implemented after completion of the combination. The combined company projections prepared by Zynga assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the combination will be obtained without any adverse effect on the combined company or on synergy projections.

		Fiscal year ended March 31,
		2023E				2024E				2025E				2026E(4)				2027E(4)				Terminal
		(in millions)
Bookings(1)		$	7,188			$	9,148			$	10,114			$	11,031			$	11,788			$	11,788
Adjusted EBITDA(2)		$	1,411			$	2,138			$	2,673			$	2,933			$	3,179			$	3,179
Cash Taxes		($	172	)		($	333	)		($	438	)		($	484	)		($	528	)		($	528	)
Stock-Based Compensation		($	462	)		($	470	)		($	498	)		($	535	)		($	566	)		($	566	)
Capital Expenditures		($	103	)		($	95	)		($	93	)		($	100	)		($	106	)		($	106	)
Change in Net Working Capital		$	167			($	68	)		$	89			$	95			$	102			$	102
Remaining Contingency Payments		($	49	)		($	41	)		$	0			$	0			$	0			$	0
Restructuring Costs		($	50	)		$	0			$	0			$	0			$	0			$	0
Unlevered Free Cash Flow(3)		$	743			$	1,132			$	1,733			$	1,909			$	2,081			$	2,081

(1)	Bookings is defined as revenue plus or minus the change in deferred revenue and other adjustments during the period.

(2)	Adjusted EBITDA (management reporting) (a) does not include the impact of the change in deferred revenue, stock-based compensation expense, acquisition-related transaction expenses, contingent consideration fair value adjustments and expenses incurred from vacated leases (which includes impairment

charges recognized), (b) does not reflect provisions for or benefits from income taxes and does not include other income (expense) net, which includes foreign exchange and asset disposition gains and losses, interest expense and interest income, and (c) excludes depreciation and amortization of tangible and intangible assets (although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future).

(3)

Unlevered Free Cash Flow is defined as Adjusted EBITDA (management reporting), minus cash taxes, minus stock-based compensation, minus capital expenditures, plus or minus changes in net working capital, minus remaining contingency payments, minus $50 million of restructuring costs to achieve the cost synergies in Take-Two’s fiscal year 2023.

(4)

Take-Two provided Zynga management with standalone projections for Take-Two’s fiscal years 2023 through 2025. As described above, Zynga extrapolated Take-Two standalone projections for fiscal years 2026 and 2027 for use in the combined company projections based on assumptions Zynga made with respect to Take-Two’s standalone projections for fiscal years 2023 through 2025.

Closing and Effective Time of the Combination

The closing of the combination will take place on a date to be designated jointly by Take-Two and Zynga, which date will be no later than the third business day after the satisfaction or waiver (subject to applicable law) of the conditions to closing (described in the section titled “The Merger Agreement—Conditions to Completion of the Merger”) other than such conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of each of such conditions at the closing.

At the closing, Zynga will file a certificate of merger relating to the merger with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the DGCL. The merger will become effective at the time when the certificate of merger is filed with the Secretary of State of the State of Delaware or at such other time as may be mutually agreed by Take-Two and Zynga and specified in the certificate of merger. Immediately following the effective time, Merger Sub 2 will file a certificate of merger relating to the subsequent merger with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the DGCL. The subsequent merger will become effective in any event immediately following the effective time.

Take-Two and Zynga currently expect the merger to close in the first quarter of Take-Two’s fiscal year 2023, ending June 30, 2022 and are working to complete the merger on this timeline and prior to the end date of January 9, 2023. However, it is possible that factors outside the control of the parties to the merger agreement could result in the merger being completed at a different time, or not at all.

Governance Matters After the Combination

Pursuant to the merger agreement, Take-Two has agreed to appoint, on or prior to the effective time, two members of the Zynga board of directors, selected by Zynga and approved by Take-Two, to the Take-Two board of directors. Take-Two will be required to approve at least two of Zynga’s current directors and, if any of such Zynga-selected directors that have been approved by Take-Two are unable or unwilling to serve on the Take-Two board of directors, then Zynga may select prior to the effective time an alternative member of the Zynga board of directors who, subject to approval by Take-Two, will be appointed to the Take-Two board of directors as of the effective time. The two members of the Zynga board of directors selected by Zynga for appointment to the Take-Two board of directors pursuant to this provision of the merger agreement are Ellen Siminoff and William “Bing” Gordon. The appointment of Ms. Siminoff and Mr. Gordon remain subject to the review and approval by Take-Two’s Corporate Governance Committee and board of directors prior to the effective time.

Regulatory Approvals and Related Matters

The obligations of Take-Two and Zynga to consummate the combination are subject to, among other conditions, the expiration or earlier termination of any waiting period (and any extension thereof) under the HSR Act and the

consent, waiver, authorization or approval of the applicable antitrust regulatory authority in Turkey, Germany, Austria and the United Kingdom (if the UK Competition and Markets Authority decides to open an investigation). Take-Two and Zynga filed the notifications required under the HSR Act with the Premerger Notification Office of the Federal Trade Commission and the Antitrust Division of the Department of Justice on January 24, 2022 and the applicable waiting period under the HSR Act expired at 11:59 p.m. Eastern Time on February 23, 2022. All required antitrust approvals have been obtained as of the date of this joint proxy statement/prospectus.

Under the merger agreement, each of Take-Two and Zynga has agreed to use their respective reasonable best efforts, subject to certain limitations, to take, or cause to be taken, all actions necessary to complete the combination and make effective the other contemplated transactions as soon as practicable after the date of the merger agreement, including to receive all required regulatory approvals so as to complete the combination and the other contemplated transactions expeditiously (but in no event later than January 9, 2023).

U.S. Federal Securities Law Consequences

Assuming the effectiveness of the registration statement on Form S-4 of which this joint proxy statement/ prospectus forms a part, the shares of Take-Two Common Stock issued in the combination will not be subject to any restrictions on transfer arising under the Securities Act or the Exchange Act, except for shares of Take-Two common stock issued to any Zynga stockholder who may be deemed an “affiliate” of Take-Two after the completion of the combination. This joint proxy statement/prospectus does not cover resales of shares of Take-Two common stock received by any person upon the completion of the combination, and no person is authorized to make any use of this joint proxy statement/prospectus, or the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part, in connection with any resale of shares of Take-Two common stock.

Accounting Treatment

Take-Two and Zynga prepare their respective financial statements in accordance with GAAP. The accounting guidance for business combinations requires the determination of the acquirer, the purchase price, the acquisition date, the fair value of assets and liabilities of the acquirer and the measurement of good will. Take-Two will be treated as the acquirer for accounting purposes.

Exchange of Zynga Certificates

Take-Two will select a bank or trust company to act as exchange agent in the merger, which is referred to as the “exchange agent.” The merger agreement provides that, at or prior to the effective time, Take-Two will deposit with the exchange agent: (a) uncertificated, book-entry shares representing the number of shares of Take-Two common stock sufficient to deliver, and Take-Two shall instruct the Exchange Agent to timely deliver, in accordance with the terms of the merger agreement, the aggregate stock consideration; and (b) immediately available funds equal to the aggregate cash consideration, together with the aggregate amount of cash in lieu of fractional shares of Take-Two common stock payable pursuant to the merger agreement and Take-Two shall instruct the Exchange Agent to timely pay such amounts subject to and in accordance with the terms of the merger agreement.

The merger agreement provides that, as promptly as practicable after the effective time, the exchange agent will send to each record holder of a certificate, in each case, other than in respect of dissenting shares, (i) a letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the certificates shall pass, only upon delivery of the certificates to the exchange agent) and (ii) instructions for use in effecting the surrender of the certificates in exchange for the merger consideration. As soon as reasonably practicable after the effective time, upon surrender of a certificate to the exchange agent together with such letter of transmittal, duly executed, and such other customary documents as may reasonably be required by the exchange agent to effect the exchange, Take-Two shall cause the exchange agent to issue and pay, to the holder (or such holder’s transferee), in accordance with the merger agreement, of such certificate, in exchange therefor, the number of full shares of Take-Two common stock (which shall be in uncertificated, book-entry form) and the amount of

cash (including in respect of any dividends or other distributions to which holders are entitled pursuant to the merger agreement, if any, or any other amounts payable pursuant to the merger agreement) into which the aggregate number of shares of Zynga common stock previously represented by such certificate shall have been converted pursuant to the merger agreement. The exchange agent shall accept such certificates upon compliance with such reasonable terms and conditions as the exchange agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. Holders of uncertificated Zynga common stock will not be required to deliver a certificate or an executed letter of transmittal to the exchange agent to receive the merger consideration with respect to such uncertificated Zynga stock. As soon as reasonably practicable after the effective time, upon receipt of an “agent’s message” in customary form (it being understood that holders of uncertificated Zynga stock will be deemed to have transferred such uncertificated Zynga stock upon receipt of an “agent’s message” or such other evidence, if any, as the exchange agent may reasonably request) with respect to a holder of uncertificated Zynga stock (or such holder’s transferee in accordance with the merger agreement), Take-Two shall cause the exchange agent to issue and pay, to such holder (or such holder’s transferee in accordance with the merger agreement, in exchange therefor), the number of full shares of Take-Two common stock (which shall be in uncertificated, book-entry form) and the amount of cash (including in respect of any dividends or other distributions to which holders are entitled pursuant to the merger agreement, if any) into which the aggregate number of shares of uncertificated Zynga stock shall have been converted pursuant to the merger agreement.

The merger agreement provides that, if any Zynga stock certificate has been lost, stolen or destroyed, then the owner of such lost, stolen or destroyed Zynga stock certificate may provide an appropriate affidavit, and deliver a bond, if required by the surviving corporation, in such reasonable amount as the surviving corporation may direct as indemnity against any claim that may be made against it with respect to such certificate, or other documentation (including an indemnity in customary form) reasonably requested by Take-Two, and the exchange agent will deliver, and parent will cause the exchange agent to deliver, in exchange for such lost, stolen or destroyed certificate the applicable merger consideration with respect to the shares of Zynga common stock formerly represented thereby.

Listing of Take-Two Common Stock; Delisting and Deregistration of Zynga Common Stock

It is a condition to the combination that the shares of Take-Two common stock to be issued to Zynga stockholders in the combination be approved for listing on Nasdaq, subject to official notice of issuance. If the combination is completed, Zynga common stock will be delisted from Nasdaq and deregistered under the Exchange Act, following which Zynga will no longer be required to file periodic reports with the SEC with respect to Zynga common stock.

Under the merger agreement, Take-Two has agreed to use its reasonable best efforts to cause the shares of Take-Two common stock to be issued in connection with the merger to be approved for listing (subject to official notice of issuance) on the Nasdaq at or prior to the effective time.

Litigation Relating to the Combination

As of March 29, 2022, nine complaints have been filed in federal courts by certain Zynga stockholders against Zynga and the members of the Zynga board as well as, in two of the complaints, Take-Two, Merger Sub 1 and Merger Sub 2, in connection with the combination. Each of the complaints asserts claims for violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, alleging that certain disclosures regarding the combination in the preliminary joint proxy statement/prospectus are false and misleading. Zynga and Take-Two believe that the claims asserted in these complaints are meritless.

Zynga and/or Take-Two stockholders may file additional lawsuits challenging the combination, which may name Take-Two, Zynga, members of their respective boards of directors and/or others as defendants. No assurance can be made as to the outcome of such lawsuits, including the amount of costs associated with defending, settling, or any other liabilities that may be incurred in connection with the litigation or settlement of, such claims.