Zynga Inc, the biggest maker of online games for Facebook, was sued by an Abu Dhabi-based investment firm that claims it is being denied the chance to purchase a stake in the company - the Bloomberg is reporting.
Alpha Investment has a contract to buy one million shares of closely held Zynga from Andrew Trader, a former executive at the gamemaker, Alpha claimed in a complaint filed in Delaware Chancery Court in Wilmington.
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More details from the Bloomberg follows
Zynga Inc, the biggest maker of online games for Facebook, was sued by an Abu Dhabi-based investment firm that claims it is being denied the chance to purchase a stake in the company.
Alpha Investment has a contract to buy one million shares of closely held Zynga from Andrew Trader, a former executive at the gamemaker, Alpha claimed in a complaint filed on Monday in Delaware Chancery Court in Wilmington.
Alpha says it has agreed to pay $12.87m for one million shares, which would value Zynga, the maker of games such as FarmVille and Mafia Wars, at $6.2bn.
“Zynga’s wrongful conduct is interfering with Alpha’s right and its opportunity to hold the shares free from unwarranted transfer restrictions,” Alpha said in court papers.
Zynga is among web companies drawing the attention of institutional investors before they go public. Earlier this month, Zynga was in talks to raise money from Baltimore-based T Rowe Price Group, according to two people familiar with the matter.
Goldman Sachs Group led an investment in Facebook last month, valuing the social-networking site at $50bn. T Rowe Price owns stakes in Twitter and Angie’s List.
Electronic Arts is the second-largest game publisher by sales.
Alpha is unable to complete the deal because Zynga is imposing restrictions on when Alpha can sell the stake it is trying to acquire. Zynga had 30 days to buy the shares that Trader is attempting to sell under a so-called right of first refusal clause, according to the complaint.
Alpha said that after the 30-day period expired, Zynga stopped the sale from going forward by contacting the trading company handling the sale.
Alpha’s $12.87m payment is being held in an escrow account, according to the complaint.
Zynga said in an e-mailed statement that it complies with all federal and state securities laws.
“Sometimes would-be buyers do not fully understand or appreciate the need for such compliance,” Jay Monahan, deputy general counsel, said in the statement.
Trader didn’t immediately return a call for comment made to venture capital firm Maveron, where he was named Entrepreneur in Residence last year.
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