TAKE TWO INTERACTIVE SOFTWARE INC 10-Q

Item 1A. Risk Factors There have been no material changes to the Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, except for the two additional listed below that relate to our pending acquisition of Zynga. The Zynga acquisition may not be completed and the merger agreement may be terminated in accordance with its terms. The Zynga acquisition is subject to a number of conditions that must be satisfied, including the receipt of certain regulatory approvals and the approval by Take-Two stockholders of the Take-Two share issuance proposal, the Take-Two charter amendment proposal, and approval by Zynga stockholders of the Zynga merger proposal, or waived (to the extent permitted), in each case prior to the completion of the transaction. These conditions to the completion of the transaction, some of which are beyond the control of Take-Two and Zynga, may not be satisfied or waived in a timely manner or at all, and, accordingly, the Zynga acquisition may be delayed or not completed. Additionally, either Take-Two or Zynga may terminate the merger agreement under certain circumstances, subject to the payment of a “termination fee” in certain cases, including if the merger agreement is terminated by either Take-Two or Zynga as a result of an adverse change in the recommendation of the other party’s board of directors. In such circumstances, Take-Two is required to pay to Zynga (in the case of a termination by Zynga), or Zynga is required to pay to Take-Two (in the case of a termination by Take-Two), a termination fee of $550 million. In addition, Zynga is required to pay to Take-Two a termination fee of $550 million if Zynga terminates the merger agreement to enter into a definitive agreement for an alternative business combination transaction that constitutes a “superior proposal,” unless Zynga so terminates the merger agreement during the “go-shop period’, in which case Zynga would be required to pay to Take-Two a lower termination fee of $400 million. The Zynga acquisition may present certain risks to our business and operations prior to the closing and, if consummated, after the closing. Our business and operations are subject to various risks related to the Zynga acquisition prior to closing, including: a. our operations will be restricted by the terms of the merger agreement, which may cause us to forgo otherwise beneficial business opportunities; b. the proposed transaction may disrupt our current business plans and operations; c. our management’s attention may be directed toward the completion of the Zynga acquisition and diverted away from our day-to-day business operations; d. legal proceedings may be instituted against Take-Two, Zynga or others following announcement of the proposed transaction; e. we may incur significantly higher transaction costs than we currently anticipate, such as legal, financing and accounting fees, and other costs, fees, expenses and charges related to the Zynga acquisition, whether or not the transaction is completed; and f. the Zynga acquisition may not be completed, which may have an adverse effect on our stock price and future business and financial results. In addition, in the event the Zynga acquisition is consummated, certain risks may continue to exist after the closing of the Zynga acquisition, including, among other things, risks that: a. the future results of the combined company will suffer if the combined company does not effectively manage its operations following the closing of the transaction; b. the parties may fail to successfully combine the businesses in a manner that permits the combined company to realize the benefits of the proposed transaction, including net bookings opportunities and cost synergies ; c. Take-Two, Zynga, or the combined company may be unable to retain key personnel; and d. the parties may not be able to successfully integrate Zynga’s business with Take-Two’s business or to integrate the businesses within the anticipated timeframe.