Zynga Inc. is seeking to raise as much as $1 billion in the biggest initial public offering by a U.S. Internet company since Google Inc. (Nasdaq: GOOG)

The company is offering 100 million shares for $8.50 to $10 apiece, according to a regulatory filing today. The high end of the range would value San Francisco-based Zynga, the biggest developer of games for Facebook Inc., at $7 billion.

The maker of popular games FarmVille and Mafia Wars said in July that it planned to go public. The proposed IPO follows other recent tech company IPOs including daily deal site GroupOn in November and professional networking site LinkedIn in June.

Tech IPOs aren’t always hits. Shares of Groupon, for example, are trading below their IPO price.

Zynga was founded in 2007 by CEO Mark Pincus. It has about 2,300 employees.

Zynga had originally planned a larger IPO, scaling back after Internet companies including Groupon Inc. and Pandora Media Inc. sank following their debuts this year, a person familiar with the plans said yesterday. Zynga is selling about 14 percent of its common stock, a larger portion than some Web companies have sold this year in offerings.

“It’s a reflection of what we’ve seen in Groupon,” said David Dillon, a San Francisco-based portfolio manager at HighMark Capital Management, which oversees about $17 billion. “If you price yourself too high, you do yourself a disservice in the long term.”

The top end of Zynga’s price range would value the company at 6.8 times trailing 12-month sales, according to the filing. Game maker Electronic Arts Inc. (ERTS) had a market value of $7.73 billion at yesterday’s close, or about 2 times sales in the same period, Bloomberg data show.

Facebook IPO?

Facebook may raise about $10 billion in an IPO next year that would value the world’s largest social-networking site at more than $100 billion, a person with knowledge of the matter said Nov. 29. Google, operator of the world’s biggest search engine, raised $1.9 billion in its 2004 IPO, including an over- allotment option.

Venture backer Avalon Ventures, based in La Jolla, California, is selling the largest portion of Zynga at more than 2.5 million shares, or about 7 percent of its stake. Founder and CEO Pincus, who isn’t selling any shares in the offering, will have about 37 percent voting control once the offering is complete.

Foundry Group and Institutional Venture Partners also are each selling about 2.5 million shares, while Union Square Ventures is offering 2.2 million. Venture firm Kleiner Perkins Caufield & Byers, Zynga’s biggest shareholder after Pincus, isn’t selling shares in the IPO.

Google and buyout firm Silver Lake are trimming their stakes by about 1.7 million shares each. Mail.ru Group Ltd. and Digital Sky Technologies, both managed by Russian billionaire Yuri Milner, are selling more than 1 million shares combined. Investment firm Tiger Global Management is offering about 554,000 shares.

Popular Games

Zynga aims to capitalize on the popularity of social networks and virtual goods. The company lets users play games for free and then makes money by selling items, such as a townhouse in “CityVille” or a shipyard in “Empires & Allies.”

Founded in 2007, Zynga has hired Morgan Stanley and Goldman Sachs Group Inc. (GS) to manage the IPO. Zynga’s shares will trade on the Nasdaq Stock Market under the symbol ZNGA.

About 6.7 million of Zynga users were paying customers in the first nine months of the year, up from 5.1 million in the year-earlier period, according to the filing. Revenue more than doubled to $828.9 million. The worldwide virtual-goods market will more than double to $22.5 billion in 2015 from $9.27 billion last year, according to Lazard Capital Markets.

In October, Zynga announced a new service, called Project Z, geared toward reducing its dependence on Facebook users. The company also introduced new games, including “Zynga Bingo” and “Hidden Chronicles.”

Diversifying

Ninety-three percent of Zynga’s third-quarter revenue was generated on Facebook, the world’s most popular social network. That number has ranged from 91 percent to 94 percent since the beginning of last year, according to Zynga filings.

Adding more mobile games is part of Zynga’s plan to diversify. The company said in November that the number of daily active users on mobile devices increased more than 10-fold from November 2010 to September 2011, reaching 9.9 million. By October, the number was 11.1 million.

Sunil Paul, a founding partner of venture capital firm Spring Ventures, recently joined Zynga’s board. Paul, who started software companies Brightmail Inc. and FreeLoader, was brought on because of “his extensive experience with Internet companies,” Zynga said on Nov. 17.

Groupon’s Offering

Groupon went public earlier this month, helping revive the IPO market after the European debt crisis and stock-market volatility hampered deals. The shares of the Chicago-based company, which leads the Internet-coupon industry, have dropped 5.3 percent through yesterday.

Angie’s List, a site that rates plumbers, contractors and other service providers, has seen its shares decline 3.5 percent since their debut on the Nasdaq on Nov. 17.

Yelp Inc., which features user reviews of restaurants and businesses, also is planning an IPO. The San Francisco-based company filed on Nov. 17 to raise as much as $100 million in a 2012 offering. The $100 million amount is typically used as a placeholder to calculate fees and may change.

(Bloomberg and The Associated Press contributed to this report.)

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