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Zynga (proposed ZNGA), the leading social game developer for Facebook, announced terms for its highly anticipated IPO on Friday. The San Francisco, CA-based company is expected to raise $925 million by offering 100 million Class A shares at a price range of $8.50 to $10.00 and surpass Groupon (NASDAQ:GRPN) as the largest Internet IPO since Google (NASDAQ:GOOG) went public in 2004. Including the overallotment option, Zynga could raise over $1 billion. Zynga plans to list on the NASDAQ under the ticker symbol ZNGA. At the midpoint of the proposed range, the company would command a market value of $8.3 billion on a fully diluted basis. Morgan Stanley (NYSE:MS) and Goldman, Sachs & Co. (NYSE:GS) are the lead underwriters on the deal, which is expected to price on Thursday, December 15.

Created in 2007 by entrepreneurial CEO Mark Pincus, Zynga has rapidly grown its business to reach over $1 billion in annualized revenue as of the end of the 3Q11. According to its most recent SEC filing, Zynga has a presence in 175 countries and 227 million average monthly active users, more than the next eight social game developers combined. Using a free-to-play model, Zynga generates most of its revenue by selling virtual goods to a small percentage of its players. Major venture backers include Kleiner Perkins, Institutional Venture Partners, Union Square Ventures, Foundry Group and Avalon Ventures. With the exception of Kleiner Perkins, all are selling roughly 7% of their holdings on the overallotment. Smaller shareholders also planning to sell on the IPO include Google, Silver Lake Partners, Mail.ru., Digital Sky Technologies and Tiger Global Management. Due to his 100% ownership of Class C stock, which has 70 votes per share (as compared with seven votes for Class B stock and one vote for Class A stock), CEO Mark Pincus will own 37% voting control after the IPO.

At the $9.25 midpoint, Zynga is proposing an enterprise value of roughly $6.4 billion and a 5-6x 2011 sales multiple, as compared with 7x for Pandora (NYSE:P), 12x for LinkedIn (NYSE:LNKD) and 7x for Groupon (GRPN). Despite lackluster performance by recent Internet IPOs, Zynga is likely to generate interest as a fast-growing company with an attractive margin profile (26% LTM EBITDA) and positive cash flow dynamics ($84 million in LTM free cash flow). Angie's List (NASDAQ:ANGI) and Groupon are down 4% and 5%, respectively, from their offer prices.

Source: Social Gaming Giant Zynga Announces Terms For Biggest Internet IPO Since Google