EA extends, lowers Take-Two offer

Megapublisher pushes its deadline to May 16, but lowers bid to $25.74 per share following measure approval; GTAIV publisher remains defiant with only 8.3 percent of stock tendered.

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Yesterday brought two key developments in the ongoing Electronic Arts/Take-Two Interactive takeover saga. The morning began with the Federal Trade Commission's announcement that it was launching an investigation to see if an EA buyout of the Grand Theft Auto IV publisher would violate anticompetitive legislation. The evening ended with a Take-Two stockholder meeting in which chairman Strauss Zelnick underlined the company board's repeated declarations that EA's $2 billion buyout offer is "the wrong price at the wrong time."

Today's news cycle began with yet more developments in the would-be megamerger. EA announced that its takeover offer, which was set to expire at 11:59 p.m. this evening, was being extended to May 16. The new date falls more than two weeks after April 30, which is one day after Grand Theft Auto IV's worldwide launch and the day Take-Two said it would begin entertaining acquisition suitors. However, Owen Mahoney, Electronic Arts' senior vice president of business development, told the Reuters news service that the actual reason for the delay was the FTC's investigation--an investigation that analysts believe is much ado about nothing.

"We assign a relatively low probability to a deal getting blocked on anti-competitive grounds, with overlap in the sports genre likely drawing the additional scrutiny," UBS' Ben Schachter said in a note to investors. "Worst case, a combined company would be forced to divest certain assets/franchises, but we see even that as unlikely. ... Given limited info, it's difficult to say how any regulatory conditions would impact valuation, but clearly synergies around Sports are a key component of the deal."

In addition to delaying its takeover deadline, EA also lowered its bid from $26 to $25.74 per share--a price Mahoney declared to still be "full and fair." The lowering came as a result of the approval of a "poison pill" measure which would dilute Take-Two's stock in the event of a takeover. Under the terms of the measure, an additional 780,000 shares would vest and be granted to Zelnick, CEO Ben Feder, and executive vice president Karl Slatoff if a purchase took place.

But while the lowering did not affect the worth of EA's overall bid, Take-Two still issued another uncowed communique after the move was taken. "Take-Two's board of directors has maintained from the beginning, and continues to believe, that Electronic Arts' proposal undervalues our company," said Zelnick in a statement. "[EA] undervalued the company at $26 per share, and it certainly undervalues Take-Two at $25.74." Take-Two went on to point out that EA has so far acquired only 6,432,787--just 8.3 percent--of the company's outstanding shares.

Although EA believes its new price is fair, analysts think the company will have to sweeten the pot to woo enough Take-Two shareholders for a takeover. "We continue to believe EA wants to buy Take-Two but will likely have to raise their tender to $30 per share if they expect to close the deal," said Janco Partners' Mike Hickey, who isn't positive that the massive publisher will follow through. "It's difficult for us to determine EA's willingness to increase their bid to complete the acquisition, but the accretive nature of the deal seems obvious and the incremental cost of a higher bid seems minimal compared to the longer-term benefits."

Discussion

167 comments
jdiego82
jdiego82

I wonder if this'll backfire, then T2 ends up owning EA... :)

deadlynatas
deadlynatas

stock is going to be hell in video game companys in the next year or maybee the next month.

vzcrsp14
vzcrsp14

Competition is good; I don't know whats wrong on this days, but everybody knew what happened with madden vs nfl 2k. Competition push developer to produce better games.

lendrahcir
lendrahcir

I wish EA would just cop-on, they want the gaming World to be a monopoly. If this happens, the price of games will change dramatically, and the quality will drop, hugely! EA's (developed) games are already below bar and if they start taking over companies who will we have to compare the shoddy games to. Please PLEASE don't let EA take over ANY companies. Everyone boycott their products, do you really want lower quality games being pushed out into the market! Who can honestly say they are happy with the progress of the latest EA games (Madden for example, glitch fest 08 ). How many years does it take to make a genuinely decent product! DO NOT let this happen!

mrkame16
mrkame16

Lets Help out T2 buy the GTA4 Special Edition!! Down With Evil Empire Called EA.

mrkame16
mrkame16

Im glad the FCC is investigating, EA has a stranglehold on the NFl License, and now they want the MLB license.

Bigrobowski
Bigrobowski

sooo...$26 didn't get the deal done,so lowering the offer will ? lol that is so stupid.i wouldn't even care about this at all if take two didn't have rights to mlb games.EA mvp baseball was the best thing going until they lost the license,but i guess it serves them right for forcing madden down everyone's throats by taking the nfl license.

muscled_arbiter
muscled_arbiter

This is pretty exciting but sad. EA does not seem like a cool company anymore. More so like a big Microsoft trying to eat anyone who still has creativity. I want to see Take Two drop the poison pill. That would be cool to see what it does.

neock2003
neock2003

Don't give in Take Two. If you do then I will have no choice but to take all of the great games you made in the past and burn them!

darkride66
darkride66

Santhin said "I'd like you to show me on the doll where EA touched you." That, my friend, is funny stuff. :)

McGregor
McGregor

T2, do you really want a company like EA taking over? All they will do is take your hard work, and make it into a yearly mediocre title. I can see it now, GTAV, a rehash of GTAIV, but with V at the end! I do understand that it would be hard to pass up 2 billion dollars though.

Santhin
Santhin

I'd like you to show me on the doll where EA touched you.

Hvac0120
Hvac0120

EA keeps making threats like they have the upper-hand. Maybe they do? Since I am only a gaming consumer and not an industry insider, I can't say. From this side of the conversation, it seems that T2 has good reason to keep denying EA a successful buyout. If GTA IV does go on to sell 9+ million in it's first week, T2 will have a huge upper-hand on the situation. I think it's a bad idea for EA to be making threats in the form of hostile take-over and lowering the bid.

darkride66
darkride66

jer_1 said "Down with EA's evil empire. I hope that company finally withers and dies off. Stop buying their ***** games people!" I'll stop buying EA games when EA stops putting out great games. NHL 08 was fantastic, Madden and FIFA received excellent reviews, Burnout is nothing short of awesome and even Army of Two was a fun play. Now that EA has publicly committed to developing new IP's and greater autonomy for their developers I can't wait to see what they come out with.

Damnation_6
Damnation_6

This is why a company should probably only sell 40% of the stock they have and keep the rest so they can't be taken over :P And what good is a deadline if you extend it. Go home EA...Go home. And Bandarman......Bioshock is a game from Take2...not EA. EA has the license to System shock.....not bioshok

Trisco2k
Trisco2k

Alright everybody, go out and pre order your copy GTA IV and buy other R* games so T2 can tell EA to piss off.

bandarman
bandarman

I am keeping my fingers crossed in this matter. I just don't want EA to buy Taketwo only b/c of 2K sports... as EA's got a huge competitor back there... either they're gonna end (outstanding) 2k series or merge it into a ridiculus playing NBA Live! As far as GTA is concerned, I'm good with it... yeah its gonna get into all the consoles and will feature real ads but EA wouldn't change the minds behind it ... as they don't have their own to compete against it! Plus.... anything that goes under EA becomes an yearly franchise of crappyness.... I don't blame you EA for this... but they have produced amazing games recently like, Bioshock and Burnout Paradise... plus they are the ones who let us (non-X360 owners) get a taste of Mass Effect!

Pyro77
Pyro77

I'm pleased with the amount of negative attention this is bringing to EA. More anticompetitive practices investigations please =).

clintbrew
clintbrew

i hope Take two can hold on until after 29th of April then Take two can own EA

Mor-GanX
Mor-GanX

All EA would do is fill all the new GTA games with real-world advertisements and probably try to release 1 or 2 mediocre GTA-themed games every year for every single console.

Proman84
Proman84

I really hope Take-Two manages to stay independent.

--Sinister--
--Sinister--

And then when Take-Two refuses them AGAIN at the 16th, EA will extend the time yet again for another few weeks and raise the price by $0.02. EA, drop it, you loss, beat it, nobody likes you and your Godfather, Madden, or BioShock 2 featuring modern, in-game ads for Pizza Hut

jer_1
jer_1

Down with EA's evil empire. I hope that company finally withers and dies off. Stop buying their ***** games people! Voting with your money is the ONLY way to hurt such a corporation!!! "O'doyll, I got a feeling your whole familys going down."

johno102
johno102

be sad if ea gets ahold of it..if they ever do that is :D means theyd change stuff for the worse and itd never be the same again... *continues to clean spot on wall of fame for next gta*

osmifura
osmifura

I guess if EA takes it, will make the market of the game go down for what all the people are saying! Damn EA just leave it alone there is nothing else to add!

lamprey263
lamprey263

I guess this is how they at EA gracefully accept rejection... bwahahaha!!

creepster32000
creepster32000

EA destroy's games they slap them with parent acceptence they molest the game industry like Ultima Online its one of the very first mmorpg's and ever since they bought it the games gone to hell lost over 3/4's population before any of todays big time mmorpg's came out

beckoflight
beckoflight

AFTER GTA4 will be lunched ( not interested in the game ) :P buti know its going to be a succes ....& thats exactly why EA pushes 2K evan more & 2k knows that .......its the UBISOFT phenomene all over again after 5 million copies of AC & 2 mill of R6V2 .... EA just can't get UBI anymore + infact UBI bought another 3.1% of stock back from EA !

VegetaMaelstrom
VegetaMaelstrom

This has become some laughable game. EA has acted all tough by announcing not one, not two, but three FINAL DEADLINES so what makes anyone think this time will be different? When someone issues you an ultimatum and you call their bluff, the jig is up. They've lost. Apparently EA hasn't figured that out yet because they are still marching on, apparently oblivious to the fact that Take-Two has said NO and only 8.3 percent of the shareholders have sold out to EA so far. Threats, scare tactics, false praise and paying off "analysts" to make your deal look appealing haven't worked EA so whats next? Are you going to threaten to bomb Take-Two offices if they refuse your self-proclaimed "full and fair" offer? Its full of something alright. Something called bullsh*t.

mrjasler
mrjasler

now that EA wants take two everyone is saying how T2 is soo good and all. I knew this way back so i bought T2 stock at $15 .. now look at it. If you all think that T2 are great then how come you all didn't buy it?

ise1880
ise1880

I hope EA go's out of business -likely no. cause stupid people keap buying there games. when was the last time anyone has said wow to an EA game? for me it was Burnout 3 and that was a Criterion game. it was only published by EA because at the time ACCLAIM went bankrupt. so I guess i never said wow to an EA game! thats why they belong in hell!

grigjd3
grigjd3

Autolycus, I find it interesting that you somehow think Take Two isn't big business.

speed45823
speed45823

[This message was deleted at the request of a moderator or administrator]

Autolycus
Autolycus

EA will win because the U.S. Government cares about big business and not fairness or its citizens.

Blue_Heeler
Blue_Heeler

Screw EA and their monopolistic attitude toward gaming.

goosey7683
goosey7683

ea has gone downhill alot and it makes me mad that they are trying to buy take-two so they can stay alive i mean come on! Just give up ea no one even likes your games anymore.

_Peoples_Champ_
_Peoples_Champ_

Stocks are going to go up high once GTA 4 comes out. Anybody who is stopped to sell now for $30 or even the cheaper price will regret it. By the time the game comes out, EA will have to make a bigger offer. Those who sold for $30 will losse out

nate1222
nate1222

I really hope that this NEVER happens. I remember the sorry a** job EA did with marketing "Time Splitters Future Perfect". TSFP was an awesome game that I still own and love. It should've sold twice what it did. I remember the lack of hype during TSFP's launch. So EA NOT owning Take Two is really a good thing.

biggzzpapa000
biggzzpapa000

EA lowered there offer most likely because they have already purchased the missing offer in shares. I.E. they own 8.3% of Take Two already so why offer the same buy-out for what they already own. Take Two won't sell, think of this folks, Take Two is the best company at Pre-Sale hype. They will take a lawsuit on just to get word out about the next up-coming game. So all Dumba** EA is doing is allowing TakeTwo to catch a fiscal quarter of free advertising. UH, now everyone laugh with the true prank-master which is TakeTwo. Thank you EA for all the free advertising on our new up and coming GTA title. They are truely idiots when you put about four different aspects onto the situation. YOU GO TAKE TWO. The truest know whats really going on. AND TNX EA. For all the pre-release hype on the biggest title to hit any console. EVER. NIKO IS COMING TO KICK EAz ASS!!!

Madjik2k2
Madjik2k2

You guys don't seem to understand. EA took their offer hostile and have been appealing to the stock holders for some time now. By LOWERING the price, they are basically saying "Get it now, or it'll keep going down". They want to make the stock holder go "Wait WHAT?!?!?!" and cash out before it gets lower and they lose any more money over it. It's a valid tactic because people don't like to loose money and even .26 cents can be a substantial hit if you own a lot of stock.... Pray it doesn't work. I'd love to see T2 stay right where it is.

NFSU2_RC3
NFSU2_RC3

doesn't R* hate ea? in san andreas a license plate read "ea sucks"....man they were right

Spyhunter_101
Spyhunter_101

everybody buy bully and gta4 keep ea from buying t2

DevilD2005
DevilD2005

EA...this is just getting shamefull. What sickens me is that you continueing to do this means we have to continue to hear about it. Let Take 2 live in peace.

osiris
osiris

p3313mp33x - "Why would EA lower it's price, T2 already said the previous offer wasn't up to par. Sounds like the idea came from EA's creativity department." hahahahahahaha I completely agree.

ShadowOfKratos
ShadowOfKratos

The evening ended with a Take-Two stockholder meeting in which chairman Strauss Zelnick underlined the company board's repeated declarations that EA's $2 billion buyout offer is "the wrong price at the wrong time." EA's lost it's mind and shame!!! Right price would be all of EA's funds. Right time would be the next lifetime. I used to love EA... Now there is no other game company out there that I dislike more.

-Raiden-
-Raiden-

Out with EA Rockstar rocks! And konami

CasinoOutlaw247
CasinoOutlaw247

It's all about this ($) with EA and not quality. I am hoping that sales for Grand Theft Auto IV go through the roof and Rockstar* and Take-Two have a smile from ear to ear when it all goes down. I am buying the regular edition and just may buy the special edition as well. 2X sales = more profits for the cause.

p3313mp33x
p3313mp33x

Why would EA lower it's price, T2 already said the previous offer wasn't up to par. Sounds like the idea came from EA's creativity department.