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
“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.