Take 2 says no to EA takeover, holding out for better offer
Not content with acquiring VG Holdings, EA Games is gunning to takeover beleaguered games company Take-Two Interactive. They’ve gone so far as to make a $2 billion unsolicited bid…which the Grand Theft Auto Guys turned down.
EA’s proposal in a nutshell: $26 per share in cash. That might not sound like a lot but it’s a hefty 64 percent over Take-Two’s closing stock price last Feb. 15th, the last trading day before EA sent over a revised proposal to Take-Two. It’s also a 63 percent premium if compared to Take-Two’s trailing average price over the 30 trading days ending February 15th. EA had initially offered $25 per share, upping it by $1 in a revised proposal. Not inviting enough for Take-Two, though.
Adding Take-Two to its stable would strengthen EA’s presence in the gaming market, diversifying it gaming titles. It doesn’t hurt that Take-Two’s Grand Theft Auto series are very recognizable names, with the latest installment coming out in a couple of months.
EA made the proposal via a letter sent Feb. 19th by EA Chief Executive Officer John Riccitiello, addressed to Strauss Zelnick, Executive Chairman of Take-Two’s Board of Directors. After the first rejected bid, EA chose to make the letter public. Take-Two’s really not in a position to be very picky, what with the Hot Coffee controversy and is dependence on a very small stable of titles. The letter from EA notes those challenges, saying: “Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.”
But the doors aren’t closed as yet – Take-Two has said it was willing to take up discussions with EA on April 30th, 2008 after Grand Theft Auto IV is on the market. “We offered to initiate discussions with EA on April 30th, 2008…this offer demonstrated our commitment to pursuing all avenues to maximize stockholder value, while we believe that EA’s refusal to entertain this path is evidence of their desire to acquire Take-Two at a significant discount, whereas we believe this value rightly belongs to our stockholders.”
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