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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.

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I'm a gamer
By JonM on 3/27/2008 7:48:34 AM , Rating: 5
I am a gamer. As a gamer, I hate EA. As a gamer who hates EA, I am very glad take two is not giving in.

But seriously, take two publishes some of my favorite games. I couldn't stand to see them get gobbled up by EA. Personally, I have stopped supporting EA since they bought the exclusive license for the NFL. Call me what you will, but I am just not willing to feed into a company who does such things to shut out competition. Especially when it eradicates games I used to play religiously for entertainment.

Bravo Take-Two. Although ever since I heard this news it has felt inevitable that a takeover will happen. Money talks.




RE: I'm a gamer
By Sandok on 3/27/08, Rating: -1
RE: I'm a gamer
By Monkmachine on 3/27/2008 8:12:30 AM , Rating: 5
quote:
Why do people hate EA? They don't ONLY make bad games you know...


Because EA rush out games for pure profit before they are finished then try a couple of patches to fix the main problems and still leave most of the smaller bugs forever.

Remember BF2? We waited 6months for a patch to stop the servers crashing every hour. EA are the scum of the Earth as far as gamers are concerned and they are in the same league as MS.

Good on Take two, we don't want the GTA series going the same way as C&C went after EA swallowed up Westwood.

I HATE EA!!!!


RE: I'm a gamer
By bhieb on 3/27/2008 9:27:34 AM , Rating: 5
Hey at least you got to download the 300MB patch from some 3rd party file share at 20k a second (or pay to get proper speeds), because they were to cheap to even host it themselves.


RE: I'm a gamer
By Samus on 3/27/2008 11:59:14 AM , Rating: 2
haha, tru dat. EA has the worst customer service of any game company, ever. I'm sure everyone remembers Battlefield 1942 didn't even have functional network support out of the box. A patch, three months later, added horribly buggy network support, and extended through Battlefield 2. BF2142 has been pretty smooth sailing since its introduction, but charging $20 for Northern Strike, which added 2 maps and a few new accessories, was a complete kick in the nuts to us gamers. What a joke. Expansion pack? Right...


RE: I'm a gamer
By callmeroy on 3/27/2008 4:43:20 PM , Rating: 3
Any of you "older gamers" remember the actual "glory days" of EA? Remember back during the C64 reign -- everyone's opinion of EA back then (over 20 years ago) was pretty much the exact OPPOSITE of how it is now. Boy what can happen in 20 years huh? :>

Anyway I don't dislike EA because of their games, they turn out or at least publish some quality titles -- but its their customer service that really turns me against them. They by far have the worse customer service in the entire industry IMO.

And they are greedy bastards too, they will nickle and dime you for anything whenever they can.

But the two top things that make my blood boil with them is how long you want for any semblance of service (and then find out the service you waited for sucks)....and of course the notoriously bad record as of late with them releasing buggy product (not normal buggy mind you, but I mean substantially pre-mature product) and you have wait, wait and wait for them to actually fix the thing you paid for!

So yeah that's what so many hate them. ;)


RE: I'm a gamer
By Nik00117 on 3/27/2008 6:06:23 PM , Rating: 2
I agree 100%, now as one person pointed out to me once, the devs behind BF2 dice could also be blamed for those issues.

However fact of the matter is EA has serious respect issues among its gamers, I don't like EA taking over Take Two and I hope Take Two will keep it gamer pride and regradless of what EA offers they will refuse.


RE: I'm a gamer
By RaptorZA on 3/27/08, Rating: -1
RE: I'm a gamer
By xsilver on 3/27/2008 8:14:05 AM , Rating: 5
people hate EA not because they are big but because they butcher games. If microsoft were to leave out some great features in the next windows, there will sure be some moaning but you will expect the feature to ship in the next version of windows.

EA however cuts corners to ship games out FAST and doesnt care for the creative content. Once a game is shipped they cut corners with support via patches (EA is notorious for buggy games) because this costs them money.
The other thing they do with the sports franchises is that it feels that they only plan for 1 new feature per year/game. It feels like if engineers had developed 2 new features the marketing team will just say, "no, one is enough thanks, save that one for next year - take a hike for 1 year - NO PAY!"
Lastly because EA is such a big company, they have realized that it costs too much to R&D new great content. What they do is let small houses do the hard creative work and then just come in at the last moment and go "sorry dudes, we own you now"


RE: I'm a gamer
By Tsuwamono on 3/27/2008 8:16:55 AM , Rating: 5
They dont hate EA because its number 1 they hate it because of what they do to studios.

Westwood: I used to play c&c tiberum sun all the time it had an amazing online feature with clans, chats, friends list, etc. It was really amazing and ahead of its time for what it was doing. EA bought Westwood and took down the online feature.. there was no more Westwood online(what they called it) and they left it down for a couple months then put up a new online system that was so half assed a child with 2 months programming experiance could do better.

Medal of Honor: I was hardcore into Allied Assault so when i heard about airborne i didnt even both looking at reviews or anything, i figured there is no way that AA could be so amazing and Airborne would disappoint. But it did.

BF2: Patch after huge ass patch this game still has the fundamental problems, poorly constructed models with an offset hit box, horribly uneven game play on some maps, and some serious construct issues.

BF2142: All the same as BF2 but now they added massive lag in titan mode.. I guess they like to build on failure.

Most of us dont hate EA for being number 1, we hate them because once they got number 1 they started to suck balls. Medal of Honor Allied Assault was the last of the good games.


RE: I'm a gamer
By BladeVenom on 3/27/2008 9:55:11 AM , Rating: 5
Westwood Studios R.I.P. killed by EA
Bullfrog Production R.I.P. killed by EA
Kesmai R.I.P. killed by EA
Origin Systems R.I.P. killed by EA

The studios they don't close, they move or merger. They then lose all their creativity and originality and churn out endlessly rushed sequels, or bad movie games.


RE: I'm a gamer
By TheSpaniard on 3/27/2008 10:39:12 AM , Rating: 2
god... Bullfrog.... remember high octane?

anyway I am also an EA hater. when it came down to choosing which guitar game for the PS3 I was going to get, I chose Rockband right up until I saw the EA logo on it and switched my mind. (Not that GH was better than RB but I don't trust EA that much)


RE: I'm a gamer
By Grast on 3/27/2008 12:56:14 PM , Rating: 2
Gahhh, I remember the great games that came out of those development houses.

Have you read the article on Tom's Games site about how the writers had to dumb down the story to meet the expectations of producers for BioShock.

Later..


RE: I'm a gamer
By shaunbed on 3/27/2008 9:18:56 AM , Rating: 5
I personally dislike EA..

It all comes down to business practices.

EA has a history of buying very high talent companies (like Origin, Westwood, etc) for their intellectual property. Usually, they cut quality and innovation refocusing the studio so its primary revenue is derived from its prestigious ip(ie. Origin used to produce games other than Ultima Online) and kill off all of the games the die-hard fanatics really loved.

Most US software companies have been very creative with poor business practices. EA's actions typically supply decent but cut-throat business practices at the cost of a company's creativity. EA has some of the best business practices in the industry.

The purchased company starts making money for the cost of its soul.

It is easy to love EA as a business.
It is very hard to love EA as a company producing games I might want to buy.

If EA bought Square, Square would probably only produce Final Fantasy. The games would probably be templatized on the most successful releases and their budgets reduced where possible to maximize profit. The games would probably come out in a more reliable fashion. So if you want to see FF 7 Part 2-312, please support EA.


RE: I'm a gamer
By AnnihilatorX on 3/27/2008 9:19:53 AM , Rating: 5
Sigh they literally destroyed the Simcity franchise


RE: I'm a gamer
By AlphaVirus on 3/27/2008 11:56:26 AM , Rating: 4
That almost brings a tear to my eye, just thinking about memories of me playing those Sim Cities. Getting mad because I did not have enough money left to purchase another police station and riots would start. Or picking to live on the coast so you can have fresh water but then dealing with the troublesome hurricanes. But you can never forget the fun of having a huge city and laying peril to it with acts of godliness. Starting multiple tornados, brush fires in the woods, UFO attacks, etc, just to see how well built your city really was.

Sim City, Civilization, and Command & Conquer are the greatest series in my book.


RE: I'm a gamer
By HighWing on 3/27/2008 5:53:02 PM , Rating: 2
quote:
Sigh they literally destroyed the Simcity franchise


They didn't kill it they just chose to go with the more popular The SIMS line instead.

Thats at least what I bet an EA rep would tell you.

Reality it means The Sims brought in more money so lets continue this and cancel all the rest of Maxis's games.

Though I've still been playing SimCity 4 w/ Rush Hour. *laughs* I love building a big city with a rail network and then speeding the trains around town till it goes flying off the tracks.


RE: I'm a gamer
By behemothzero on 3/27/2008 9:24:27 AM , Rating: 5
I hate EA because of what it did to Need for Speed.


RE: I'm a gamer
By bighairycamel on 3/27/2008 11:39:04 AM , Rating: 5
Ugh, don't even remind me of NfS. That game was the ORIGINAL street racing game as far as I'm concerned. Then somewhere along the lines they decided to give it an urban hip-hop approach and it's been downhill ever since (complete with in-game advertising out the whazoo).

Interestingly, after Rockstar released Midnight Club, I noticed the change in NfS. Like it's been mentioned before, EA has no creativity; they just run with other companies' ideas.


RE: I'm a gamer
By robinthakur on 3/27/2008 1:41:28 PM , Rating: 4