Zynga plans secondary offering, sources claim

Social games company hopes to avoid 'lockup selloff'
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Social games company hopes to avoid 'lockup selloff'

Social games company Zynga may be planning a secondary public offering to avoid a "lockup selloff", sources have claimed.

The rumor, reported by Bloomberg, suggests no new stock will be offered in the plan, but that it will allow some investors to sell stock while getting larger shareholders to agree to a longer lockup period to prevent them from flooding the market with shares.

The move was designed to prevent a drop in stock similar to that of Linkedin after their lockup period expired, said two of the informers.

Company shareholders are often forbidden from selling for six months after the initial public offering, and we can expect the secondary offering to happen before the lockup period for Zynga expires in June.

A Zynga spokeswoman has said the company does not comment on speculation or rumors.