Report: Zynga Chief Mattrick tried to acquire company while still at Microsoft

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Don Mattrick, named CEO of Zynga (NASDAQ:ZNGA) last week, entered negotiations to acquire the social gaming company in 2010 while still head of Microsoft's (NASDAQ:MSFT) entertainment division, Bloomberg reports.

Sources with knowledge of the talks said that Mattrick met with Zynga founder Mark Pincus to discuss acquiring then-hot social game franchises like FarmVille to bolster Microsoft's Xbox gaming platform. The talks eventually fell apart, but insiders say Mattrick and Pincus remained in close contact and first began discussing opportunities for Mattrick at Zynga in March 2013. Both Microsoft and Zynga declined to comment.

Zynga's fortunes have shifted dramatically in the years since the Microsoft talks ended: The firm recently said it would lay off 18 percent of its workforce, or 520 employees, and would shutter its offices in New York, Los Angeles and Dallas. In the first quarter Zynga's revenue dropped 18 percent year-over-year to $264 million, and its mobile engagement metrics also took a dive, with daily active users falling from 65 million to 52 million in the year-ago quarter. Zynga also faces mounting mobile competition from rivals like Candy Crush Saga maker King.com. 

Zynga's freefall ultimately led Pincus to step down as CEO, setting the stage for Mattrick to take over. He will receive a $5 million signing bonus, $1 million salary, $25 million in restricted stock vesting over three years and additional restricted shares and options valued at $15 million, Zynga said in a filing last week.

Mattrick "deeply understands the value of a network and the importance of creating lifelong consumer relationships," Pincus wrote in a blog post announcing the hire. "He turned Xbox into the world's largest console gaming network, growing its installed base from 10 to 80 million and transformed that business from deep losses to substantial profits. And he has grown the Xbox Live player network from 6 to 50 million active members."

Pincus said he will continue as Zynga's chairman and chief product officer. "Mattrick faces two challenges," University of Michigan business professor Erik Gordon told Bloomberg. "He has to find a way to turn around a company that went from cool to cold, and he has work out his relationship to Mark Pincus, who won't be CEO but will be in control."

Microsoft recently announced its new Xbox One console, which will replace the aging Xbox 360 in November. Insiders maintain that Mattrick jumped ship so close to the Xbox One launch in response to a rumored Microsoft restructuring slated to take effect in the coming weeks, explaining he wanted a larger role within the company. Microsoft CEO Steve Ballmer has assumed control of the Xbox division ahead of the Xbox One release.

For more:
- read this Bloomberg article

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