Analyst says Take-Two is making a mistake by blocking out EA's takeover offer

Electronic Arts’ offer to shareholders of Take-Two Interactive (TTWO) of buying up each share for $26 expires on April 11. With the deadline approaching, Take-Two management is stepping up its effort in urging its shareholders not to take EA’s offer.

In a statement released on Wednesday, the Board of Directors of Take-Two Interactive said that it thoroughly reviewed Electronic Arts’ unsolicited conditional tender offer and determined that the $26.00 per share cash offer is inadequate.

“Our Board, after careful review, has unanimously determined that Electronic Arts' offer continues to provide insufficient value and remains opportunistically timed to capture the value of the upcoming Grand Theft Auto IV launch at the expense of our stockholders,” Strauss Zelnick, Chairman of the Board of Take-Two, commented. “Our stockholders' interests would hardly be served by accepting an offer from EA at the wrong price and the wrong time. As a result, the Board recommends that stockholders not tender any of their shares to EA.”

Take-Two isn’t completely shutting out EA, however, as the company did specify that it will consider business combination with third parties, including Electronic Arts.

Meanwhile, Electronic Arts’ CFO Warren Jenson announced his resignation, saying only that it was time “to write the next chapter” in his career. Jenson’s resignation, which will leave him in EA until March 31, comes at a curious time during a Take-Two takeover effort.

“I can say very concretely that Warren is highly supportive of EA's efforts around Take-Two and is very much aligned with (Chief Executive) John Riccitiello,” said EA spokeswoman Holly Rockwood in a Reuters story.

Regarding EA’s offer, Wedbush Morgan Securities analyst Michael Pachter believes that Take-Two is making a mistake by taking an adversarial stance against the courtship.

“We're frankly surprised by Take-Two's rejection of EA's offer,” Pachter wrote in his analysis, recorded by GameDaily. “Take-Two shares traded at $17 immediately before the offer, and the stock's 200 day moving average was under $17 at the time of the offer.”

“In our view, Take-Two's Board has made a mistake. We believe that the company was positioned to extract a higher offer from EA by offering a friendly transaction, and its Board chose to continue its adversarial posture,” continued Pachter. “Had they offered an olive branch, we think that EA may have increased its offer by $1 or more.”

EA’s offer of $26 per share to holders of TTWO stands until the end of April 11, 2007.

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton
Related Articles

Copyright 2017 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki