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EA approaches Take-Two shareholders in takeover bid

Electronic Arts, clearly not taking “no” for an answer, has upped its efforts to acquire rival games company Take-Two Interactive, publisher of BioShock and the Grand Theft Auto series. With no headway made in negotiations with Take-Two management, EA is now going directly to the shareholders with intent to purchase all currently outstanding shares of common stock of TTWO.

EA is offering $26 cash per share, a figure that it has previously offered Take-Two management without success, with a total cash deal of $2 billion in the case of a complete buyout.

“This is a great opportunity for Take-Two shareholders. We believe Take-Two investors will see our tender offer as the best way to maximize the value of their investment in Take-Two. This tender offer provides a clear process to complete the proposed transaction,” declared EA CEO John Riccitiello.

EA states that the offer represents a 64 percent premium over Take-Two stock price on February 15, but now the $26 bid sits at around 4.4 percent above the current price. The tender offer is scheduled to expire April 11, 2008, unless the tender offer is extended. The release of Take-Two’s largest title of 2008, Grand Theft Auto 4, will be hitting stores two weeks after the close of EA’s offer.

Riccitiello added, “For EA shareholders, the combination would add additional intellectual properties to our already strong portfolio and welcome Take-Two's talented creative teams to the great development organization we've built at EA.”

Take-Two Interactive’s board of directors, intent on retaining control of the company, issued a notice to its shareholders shortly after EA’s bid, urging them not to accept.

“The Board of Directors of Take-Two Interactive Software, Inc. today recommended that Take-Two stockholders take no action at this time in response to the announcement by Electronic Arts Inc. that it has made an unsolicited conditional tender offer to acquire all of Take-Two's outstanding shares of common stock for $26 per share in cash,” read the release.

Take-Two added that it would re-examine the offer once again. “Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Take-Two's Board will review and consider EA's offer, and within 10 business days, will advise Take-Two's stockholders of the Board's position regarding the offer as well as its reasons for that position.”

This marks the second time EA has readied $2 billion in hopes of acquiring Take-Two Interactive. In February, EA made an offer of $25 per share, eventually upping it to $26, only to be rejected by Take-Two’s board.

Take-Two’s public statement at the time was, “After careful evaluation, the Board has determined that EA's proposal substantially undervalues Take-Two’s robust and enviable stable of game franchises, exceptional creative talent and strong consumer loyalty. We believe EA's unsolicited offer is highly opportunistic and is attempting to take advantage of our upcoming release of Grand Theft Auto IV, one of the most valuable and durable franchises in the industry.”

Shares of Take-Two jumped immediately following EA’s offer last month, going from $17 to the most recent trading price of $25.63.



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RE: Dont do it!
By AToZKillin on 3/13/2008 4:55:46 PM , Rating: 5
Amen. I won't do the brick thing, but I'm already kind of adverse to the stuff they put out, and probably will be more and more so. I've personally seen them ruin several franchises I used to like, and I know people who avoid EA sports games like the plague.

It's not the takeover that's really at issue here. It's their track record with takeovers. Usually, the resulting impact on the consumer is a negative one; crappier games with more bugs, DRM, in-game ads, and STILL pretty high prices. It seems to be the opposite of Google (correct me if I'm wrong). They take little fledgling companies with great ideas and expand on them to provide cool services. EA just turns gold into sh*t, and water into piss.

I doubt the investors care about this. I think the best way to convince them is to stress the fact that GTA, along w/other franchises, will continue to grow and pump the stock up well above EA's offer. Currently it's trading @ around 25 low, which means EA's offer isn't very tempting. Don't these hostile takeovers usually involve purchases of shares at an exorbitant price?

On the other hand, these offers are good for Take-Two's stock prices =) in the short term.


RE: Dont do it!
By BMFPitt on 3/13/2008 5:15:21 PM , Rating: 2
quote:
Currently it's trading @ around 25 low, which means EA's offer isn't very tempting. Don't these hostile takeovers usually involve purchases of shares at an exorbitant price?
It was trading at $17 before the offer, so the offer was about 50% higher than the price at the time. The fact that it's now $25 reflects that investors find it pretty likely that they will accept the offer.

I hope they don't, EA will destroy the franchise.


RE: Dont do it!
By Samus on 3/14/08, Rating: 0
RE: Dont do it!
By afkrotch on 3/14/2008 7:31:02 AM , Rating: 2
I'm going to have to agree with you one that one. GTA3 was pretty okay. Then they just made the same crap over and over again. Add in a motorcycle, airplane, and weight lifting. Viola. San Andreas, Vice City, Liberty City Stories, and whatever else the'll come up with.

With luck, GTA4 is a big change, but I can't see that change a whole lot. It's like the Medal of Honor series. Some things should just die out.


RE: Dont do it!
By xRyanCat on 3/14/2008 6:52:55 PM , Rating: 2
Although the differences between games can often be slim, I absolutely love GTA San Andreas. Every once in a while its fun to just go out pull a grand theft auto. (See what I did there?) GTA wouldn't have nearly the fan base it has now if it hadn't gone the route it did.


RE: Dont do it!
By Yeah on 3/14/2008 12:58:08 PM , Rating: 2
Wow .. you must not be an investor at all (neither am I but I did work for a company that handled real time quotes once) If the stock is trading at a price near what EA is offering than there is no reason for investors to sell at that price. (to EA).

What SHOULD happen at this point is TT needs to split thier stock to invite more shareholders into their game.

I'd welcome the brick thing.


RE: Dont do it!
By AlphaVirus on 3/13/2008 5:20:07 PM , Rating: 2
quote:
I doubt the investors care about this. I think the best way to convince them is to stress the fact that GTA, along w/other franchises, will continue to grow and pump the stock up well above EA's offer. Currently it's trading @ around 25 low, which means EA's offer isn't very tempting. Don't these hostile takeovers usually involve purchases of shares at an exorbitant price?

Well as the article mentions, Take2's stocks were at $17/share before EA's first offer and after the first offer it had risen to the current $25/share point. Buying $25 stocks at $26 is like a slap in the face.

EA is seriously pushing the tide to get in Take2's door before GTA4 launch it seems. I hope, for the gamers sake, Take 2 fights EA off or else we will be left with a great game with half a leg cut off due to EA's carelessness.

quote:
Amen. I won't do the brick thing, but

I would do the brick thing but EA might take over the government and put me in jail for life.


RE: Dont do it!
By molgenit on 3/14/2008 8:06:28 AM , Rating: 1
Well looking at current prices is at best short sighted. As a whole Take-2’s stock performance has been stagnant at best, even when dogs were doing FAR better than they should have in the previous Bull market.. It has consistently underperformed in its sector and most analysts are saying EA’s offer is already more than it should be. There are already 2 lawsuits by stockholders in process and if they let the deadline slip most people feel EA WILL let the offer pass and the stock will tank again, (although the release of a new product may help soften the blow a bit). If that release is not a MAJOR hit then the board would be in HUGH trouble with the stock dropping well below the $17-19 dollar mark, which would mean a certain takeover at a loss to the investors. I’m not saying its good or not, but investors often are not involved with a companies products. If people really like a company buying the stock is the best way to keep it going.


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