Zynga Gets Sued For Blocking Abu Dhabi Firm From Buying Zynga Shares

Alpha Investments, an Abu Dhabi based investment firm, is suing Zynga for denying the investment company a right to purchase Zynga shares.

zynga pokerAlpha Investments, an Abu Dhabi based investment firm, is suing Zynga for denying the investment company a right to purchase Zynga shares.

According to the complaint filed at Delaware Chancery Court in Wilmington on Monday, Alpha Investments entered into a contract to buy one million shares from Andrew Trader, a former Zynga executive. Alpha agreed to pay Trader $12.87 million for the shares, a price that valued Zynga at around $6.2 billion.

Zynga stopped Alpha Investments from closing the deal by imposing restrictions on when Alpha can sell the shares that it was acquiring. Once Zynga intervened with Alpha’s bid, it had 30 days to buy Trader’s stake under the right of first refusal clause. However, Zynga didnt buy Trader’s stake during the one month period and stopped Alpha from moving ahead with the deal by directly contacting the private exchange that was handling the sale.

Alpha investment is literally stuck in the deal, with its $12.87 million being held in an escrow account.

Zyynga on its part states that it complies with all federal and state securities laws. According to Jay Monahan, deputy general counsel at Zynga:

Sometimes would-be buyers do not fully understand or appreciate the need for such compliance.

However, Monahan failed to disclose, what the specific federal and state securities laws are that have forced Zynga to block this deal.