Take-Two asks shareholders not to take up EA's offer

Rockstar parent believes the offer is "inadequate in multiple respects"; analyst Michael Pachter thinks publisher is making a big mistake.

Earlier this month, Electronic Arts announced that it was taking its unsolicited offer for Take-Two Interactive direct to the shareholders in a hostile bid to gain control of the company after the board rejected its advances.

Analysts were mystified as to why Take-Two would turn down the offer from the megapublisher, which weighed in at $26 a share, or some $2 billion, especially when it would have meant a 64 percent premium for shareholders over Take-Two's share price before EA went public with its offer.

Once the offer went to the investors, Take-Two asked them to hold on to their stock until it advised what they should do with it--and today, it's asking them to not sell to EA.

Take-Two has released a statement listing 10 main reasons why it doesn't want the deal to go ahead, most of which the publisher has previously expressed. These include the its initial assertions that "EA's offer price is inadequate and substantially undervalues the company," that the EA offer is "opportunistic" and "had been timed to take advantage of the upcoming release of Grand Theft Auto IV," as well as the fact that "the EA offer does not reflect progress in the company's revitalisation efforts." As for new reasons, the company's financial advisors, Bear Stearns and Lehman Brothers, agreed with Take-Two executives that the offer price was inadequate. It was also noted that EA's offer would be taxable, and is "highly conditional."

The Take-Two shareholder advisory concluded that the offer was "contrary to the best interests of Take-Two's stockholders." Accordingly, it recommended that those with Take-Two stock not sell to EA.

The company also took further action to make a hostile takeover more difficult--following on from its taking up a severance plan for executives and other employees in the event of termination following a takeover. Today, among other things, it also changed the date and time of its annual meeting to April 17 at 6:30 p.m. (EDT), adopted a stockholder rights agreement, and established a "poison pill" clause that would allow for the creation of new shares in the company if any individual shareholder acquires 20 percent or more of the company in the next 180 days. The poison pill would also be triggered if an investor currently over that threshold acquired an extra 2 percent of the company.

In addition, the Take-Two board will be "exploring alternatives" to a takeover by EA, which might include a business combination with third parties (or even with EA itself), remaining independent, or "other strategic or financial alternatives that could deliver a higher stockholder value than the current EA offer." It said it has already received "indications of interest" from other third parties, although "no substantive discussions have yet occurred."

Take-Two's chairman of the board, Strauss Zelnick, commented, "We are effectively working toward a process to review all available options to maximize this value, either as an independent company or in combination with a third party, and are open to beginning informal discussions starting now. Our stockholders' interests would hardly be served by accepting an offer from EA at the wrong price and the wrong time."

Michael Pachter, senior analyst with Wedbush Morgan, called Take-Two's decision a mistake. He maintained his surprise at Take-Two's continued rejection of the EA offer, and expressed his doubt that it would get any better suitors.

"We think the board has virtually no chance of finding a better offer," Pachter said. "The EA offer has been public for 31 days, and we believe the company is not in discussions with any other party. This deal, in our opinion, makes more sense for EA than for any other company, primarily because of the synergies from consolidation of the two companies' sports businesses. No other company is in the position to realise those synergies, which we believe are substantial."

Instead of refusing the offer and closing negotiations, Pachter thinks Take-Two could have extracted a higher offer from EA in return for the prospect of a friendly takeover as opposed to a hostile one. He added, "We think that Take-Two's position that the company will have greater value after the release of Grand Theft Auto IV is naive at best, and disingenuous at worst... The absence of other offers in the interim suggests to us that EA values Take-Two more highly than any other interested party, and we are confounded that Take-Two's board believes that other parties will be willing to pay more than $26 after the release of the game."

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Discussion

296 comments
Coldblood117
Coldblood117

We need more competition in the gaming industry anyway instead of one company running the whole thing. When each company tries to make better games than others the ones who win is the gamers so if EA tried to take over everything u could jus forget about good games anymore

tunit000
tunit000

@ Jay005 Take 2 DOES develop the games, not just publish! This is their company statement: "Take-Two Interactive Software, Inc. is a leading worldwide publisher, developer and distributor of interactive entertainment software, hardware and accessories." Read it yourself: http://ir.take2games.com/index.cfm

whop
whop

Anyone remember MARVEL VS CAPCOM 2?To me the best marvel game that i wil still play today.Looking forward to capcom making a third my dreams was taking from me when EA bought the marvel license and just ruined the franchise ever since.Then i can remember a nice breath of fresh air football game called NFL 2k.To me this was the best football game series about to take storm when here come EA with there bull and buying out the NFL license.The only reason Madden bought out the NFL licence was due to the fact that they couldn't compete with 2K. 2k was just better overall and even cheaper.In all i just think EA is a bully in the market and can sometimes mess up a good thing.

agni_1
agni_1

I am so happy that Take 2 is not listing to those wall street morons. It is not a question of if take 2 would gain better exposure to the market or making money. I just wish that other companies would be like this(ahem Bioware). The simple fact is that EA is everything that gamers hate..a monopoly that pushes very bad products because well there is no competition. Bravo take-2 for having the guts to stand up to such an uncouth organization.

edgrmcmunchkin
edgrmcmunchkin

Im so sorry guys, Take 2 has been bought by EA, look this site used to be rockstar watch, (a news site about rockstar). http://www.rockstarwatch.net/news/ look at the article, EA aquires rockstar and look at this line so the Rockstar Games brand will continue, only under the EA trademark.

Duke_Bootee
Duke_Bootee

MORE REASONS TAKE-TWO SHAREHOLDERS SHOULDN'T TAKE UP EA'S OFFER: -EA GAMES SUCK! -EA is a monopoly that is plaguing the originality and art of Computer entertainment -Take-Two will be worth more than EA one day -EA stands for Electronic Arts sadly there is no are in EA Games rather its just a sweatshop that pumps out dime a dozen **** games that are over run with in game advertising (ex: NFS Pro Street) "Microsoft could interfere they have the money to do so,but probably wouldn't be smart to piss EA off. They would immediately jump to making games for Sony exclusively." - TheoleDominion1 That is insane that a game producer pulls so much weight that even Microsoft would suffer from standing up against them i say Microsoft should go for it

Sam_Lowery
Sam_Lowery

Yo Bill, if you want to make Microsoft the robin hood of gaming you should just lay down a standing offer to pay fifty cents more than any price EA ever offers for Take Two stock.

t_bohn_90_09
t_bohn_90_09

[This message was deleted at the request of the original poster]

t_bohn_90_09
t_bohn_90_09

I am one of many of you who hopes T2 will not let EA buy them out. If EA does end up buying out T2 before GTA4 is release, there is a chance that they will make the "M" rated game into a "T" rated game. Now how fun would that be? All the bad language, most of the blood, and pretty much all the missions in the game would be removed. You wouldn't be able to drink in the game! lol. They might not change the rating of the game, but how many rated "M" games have you seen come from EA? I can't think of one, can you?

Huggy12345
Huggy12345

T2 is doing a pretty good job holding off EA. We only have 30 more days till this ordeal is finished. Hopefully after GTA4's release EA will stop trying to take over T2 so they can go ahead and make more good games.

CylonAndrew
CylonAndrew

If this deal go forward, the Civalization franchise would go down the $hiter.

intelIBM
intelIBM

What if Take Two bought out EA. That would be realy good because EA wouldn't be making crapy games and it would make Take Two a bigger and better corparation. And then what if EA bought out Take Two and they turned GTA IV into a piece of garbage that no one would ever play in there life. So the point is EA dont buy out Take Two because no one wants more crappy games.

intelIBM
intelIBM

[This message was deleted at the request of the original poster]

TheoleDominion1
TheoleDominion1

Microsoft could interfere they have the money to do so,but probably wouldn't be smart to piss EA off. They would immediately jump to making games for Sony exclusively.

Autolycus
Autolycus

dont mistaken EA's power in the BUSINESS world as them having ANY power in the gaming world. In general, gamers dislike EA. They are buying up what games people love and are pumping out sequel after sequel hoping to make money off of it. Unfortunately there are too many people that simply dont care. They arent able to see that EA puts rehash after rehash out. It's one of the largest reason that SKATE was so successful. They did something different and something right, something which EA has not done in a while. Tell me, what mainstream title has EA produced other then SKATE that has sold well and been different and done correctly? There really arent many. At least T2 had Bioshock. On top of the Bioshock they also have GTA and Elder Scrolls. Those 3 games right there are H U G E in the gaming industry, so don't go thinking they arent a powerful gaming company. Unfortunately American investors are grumpy because its not easy to make a quick buck anymore. EA, on the business side, has helped the lazy get rich. Take 2 has not. Thats what this article is really about. Making lazy people richer.

jay005
jay005

Alright "madmachinegun" I think you got me on this one, or you don't because ubisoft was in the same place as take-two is now in the early 2000's. A developer make the game, a producer over see the game and most importantly the company sales the game. Ubisoft was in trouble with there company side of things, and that's why EA bought their shares on the "Open Market". Nobody will touch EA on this deal due to their power in gaming world. Take-Two is going to sale, and it kind of a smart thing try to hold for the release of GTA4 for extra money, but its also dumb to wait thinking they will raise that price tag. So "madmachinegun" just remember Rockstar and 2K Entertainment make the game, Take-Two sales the game.

neock2003
neock2003

Take two is one of the only few companies that I can repect, bec ause they actually make original games. Unlike EA whose only purpose is to make that same bull crap, all EA see's is another company that they can milk sequels. Someone should try to buy EA just to sell it to another company that diserves to make good games!!!

mikekare79
mikekare79

WE LOVE YOU TAKE TWO!!! STICK IT TO EA!!! HEY EA, GO RUIN SOME OTHER GAME FRANCHISES LIKE: BURNOUT, MADDEN, NBA LIVE, C & C, ETC. WHY NOT JUST MAKE BETTER GAMES, LIKE TAKE TWO. EA, YOU ARE A HORRIBLE CORPORATION THAT DOES NOT CARE ABOUT GAMERS. ALL EA CARES ABOUT IS IT'S STOCK PRICE. I HOPE EA GOES OUT OF BUSINESS.

madmachinegun
madmachinegun

@jay005 back then ubisoft was making good games

zaptoman
zaptoman

EA is a greedy game monster. They buy the best companies, and turn out crappy follow up games. Analysts were mystified that a game company wants to remain independent?? Good on you, Take Two.

Sparky2002
Sparky2002

"YES" IS ALL I GOTO SAY TO THAT GTA SERIES IS SAFE "FOR NOW" & TO ALL YOU EA FANS YA KNOW SOMETHINGS IN LIFE CANT BE BROUGHT OUT TAKE TWO IS STAYING TRUE TO THE FANS OF THE GAME

twashington9737
twashington9737

I like that Take Two is trying to hold strong. I'm not an EA hater, per se, but some things are just better left alone, feel me? Not to say that EA may not surprise everyone, if they get Take Two, and make it even better, somehow, but I like the "little engine that could" and HAS in Take Two. Stay strong, Take Two, stay strong....

Gamingcucumber
Gamingcucumber

Why does pacther think that they should be bought at all? Maybe (thank god) they are proud of being their OWN company? I wonder if he thought about that for a sec. Take Two should keep doing what they do, after all they are responsible for some truly amazing games.

buffdaddy69
buffdaddy69

Guess what? EA WOULD HAVE NOTHING TO DO NOR EFFECT THE THE DEVELOPMENT OF GTA 4.....Why? BECAUSE THE GAME IS DUE OUT IN 5 WEEKS..... Plus EA has many M Rated games.

HalfBak3dM0nkey
HalfBak3dM0nkey

Why does GameSpot add Pachter's blabbering mouth to everything? It's not like he has any outcome on official decisions, and it just makes Gamespot look like a poor source for information.

knowbrainer23
knowbrainer23

Personally, I think Take-Two might be trying to protect the content of GTA IV from EA's meddling. That, and keeping the game from gaining any (more) bugs, given how EA games - at least for PC - have bugs in them. If Take-Two can stall an EA takeover GTA's release, good for them; it might cause EA to lose interest in them. It just seems like EA is being highly opportunistic with this takeover, since the GTA series is a proven best seller and the cost of a takeover would be nothing compared to the revenue brought in by the game.

Fat__matt
Fat__matt

1 thing Autolycus if you look at all the modern consoles like xbox 360 the best selling game is halo 3 with 8.1 million with is way below the 40 million of smash bros which was for the NES and just taking a GTA game GTA san andreas sold 12 million on the PS2, so sales of around 10 million for GTA 4 on the xbox 360 is about right bt the best sellin game on the ps3 is only 3 million bt i think the sales will be quite a bit higher than tht so sales of around 15- 20 million seem about right. but go back to the EA matter i really hope they don't sell cause EA really will ruin GTA, they'll make it all child friendly (and who wants tht)

AndrewWiggen
AndrewWiggen

Katiff Said: "if EA owned it...the game would be changed and become rated T " What, like Crysis, Army of Two, The Godfather, Def Jam Icon, Black, and Dead Space? Just because you can't remember EA's M rated titles doesn't mean they don't make them.

jay005
jay005

Mann....Bodom_Deadbeat, being told to just shut the F**** up is pretty harsh words big-pimp. You need to know that Take-Two was already in financial problems way before EA came along. Secondly it wasn't EA looking for buyers; Take-Two was the one looking for buyers from last year to take the company off their hands. Their stock was below $13 dollars a share and dropping at one time, and then EA came and said: "we'll buy the company" and stock goes north from that would be sale. Then everybody all starts scream to high hell about EA and why they shouldn't buy Take-Two. I know 2 billion dollars is less than what Take-Two is worth but this is a failing company, without failing games. Yes, EA has a sorry-azz sports line for years now with NBA Live and EA Big games; but Take-Two was and always will be a mediocre company with money and public relations problems. Look pimp, if somebody doesn't buy this company they will go under just as fast as they got in the gaming biz. Every time they make a hit with GTA or any other violent game they make. Jack Thompson will find something wrong with the game, or a miss-guided teen will go out do something crazy and then suffer will began from those mistakes. So why not sale huh? If you keep getting sued left and right for millions of dollars from some kid's mistakes, and they find they have a copy of GTA or Man Hunt (and they will) or because their parents buys it for them or borrow it. Then who suffer from that "US" as a group? These shareholders are going to sale, due to they are tired of losing out on that would be profit or profits. There sole purpose is to make money not lose money! P.S. Ubi-soft is parsley owned by EA and look how well they are doing now. Back then ubi-soft was in the same place as Take-Two is now.

dvd1234
dvd1234

this is really agy ea shud just hop off and leave take-two alone. it duz matter because gta 5 is coming out exclusively 4 da ps3 and ea is just gonna ruin it. ps3 rules!!(ps3fanboy)360 drools!!!

Katiff
Katiff

and what kind of GTA would it be if EA owned it...the game would be changed and become rated T instead of how it should be rated m.

Bodom_Deadbeat
Bodom_Deadbeat

Everyone who said it should be sold to EA...Shut the F*** up. Sorry but EA dosn't deserve that game as they do some of the crapiest games out there. Obviously their sport games are good but other than that they suck ass. So no they shouldn't see it to EA. Why would Rockstar sell it anyways. It's their game, they made it. You know what the hell.

khai411
khai411

skyline7284 Ok hopefully i don't get like shot for sayign this but why is Take Two making this much more complicated then it already is? Just sell to EA, its not like GTA 4 can be changed, its already finished, its not like it would have the EA logo anyways. Take Two put everything on the line with GTA 4, Just sell to EA, EA will get its way eventually (we all know that) Take Two is just making a lot more complicated then it needs to be more. ----------------------------------------------------------------------------------------- Sounds like you were always bullied as kid and all you did was be submissive. "Oh just give it to him, he'll still take it anyway"

GTAMGS_Freak
GTAMGS_Freak

[QUOTE="VegetaMaelstrom"]Sorry oli54321, even a game as mediocre as Mario and Sonic at the Olympic Games for the Wii has sold over 5 million copies. Let alone Halo 3 or the motherload GTA4 will sell.[/QUOTE] too true [QUOTE="Wikipedia"]As of September 26, 2007, Grand Theft Auto: San Andreas has sold 20 million units,[40] with 8.6 million of those units being sold in the US.[39]As of March 26, 2008, Grand Theft Auto: San Andreas has sold 21.5 million units[41].[/QUOTE] Source so, overestimated? No!

GTAMGS_Freak
GTAMGS_Freak

[This message was deleted at the request of the original poster]

GTAMGS_Freak
GTAMGS_Freak

[This message was deleted at the request of the original poster]

skyline7284
skyline7284

oli54321 Figured i would spread the news, where i do think you are right on maybe GTA selling 8-9 million copies, The Sims Franchise has sold about 100,000,000 copies over 8 years :-)

skyline7284
skyline7284

Oh and brosim1104 You do know it takes a lot of money to make a video game right..?

skyline7284
skyline7284

Ok hopefully i don't get like shot for sayign this but why is Take Two making this much more complicated then it already is? Just sell to EA, its not like GTA 4 can be changed, its already finished, its not like it would have the EA logo anyways. Take Two put everything on the line with GTA 4, Just sell to EA, EA will get its way eventually (we all know that) Take Two is just making a lot more complicated then it needs to be more. Heck i'm not a big fan of EA nor Take Two but still. Do you really need to like kill the shareholders? They are in there to make money..... you shouldn't tell them what to do. If you don't want shareholders go to being a private company...

VegetaMaelstrom
VegetaMaelstrom

Sorry oli54321, even a game as mediocre as Mario and Sonic at the Olympic Games for the Wii has sold over 5 million copies. Let alone Halo 3 or the motherload GTA4 will sell.

DoomZaW
DoomZaW

Ahh yes, Rockstar is still loyal to the gamers :) :) :)

oli54321
oli54321

brosim1104 "so GTA IV will cost 50-60 dollars right???? 55x10.000.000 (sales)= 550.000.000 dollars... right??? so it is like 1/4 of EA's offer... i wouldn't sell...!!!" I think your prediction that it will sell 10 million is a bit overestimated, the top games today sell 2 million copies at most.

khai411
khai411

All "investor" and money greedy swans types should shut up. In the end money is not what it's all about, but the most money. If EA wants to shut down its rival, It should be willing to pay a boat load, not some 64% crap. Remember Tk2 makes superior sports games to those of EA and sells for less. these are games most of us will willingly pay more for. Gamespot seems to be acting like an EA pony these days.. why don't you just put the EA logo somewhere at the top corner.

J_Wil
J_Wil

I don't personally agree with that analyst when he says that GTA4 will not have an impact on the company's value. GTA is one of the most valuable franchises in the industry and will make a significant impact. Furthermore, while the synergies in sports games would help EA, the EA chairman has stated that they want Take Two for their game studios specifically Rockstar Games, which along wtih three others of Take Two's studios, is a leading studio in the industry. He said that this take over has nothing to do really with 2k sports. But yeah, I'm sure that EA's offer has no opportunistic leanings coming two months before the release of GTA when the much talked about "synergistic qualities" of 2K have been there forever. Maybe they should bring us an analyst who knows something about the industry at least.

harm0n1ca
harm0n1ca

I love the fact that the whole thing comes down to money. The idea that Take Two wants to continue to make have free reign over their game design and don't appear to be interested in selling out at first opportunity doesn't seem to come up at all. I'm not saying that's what it is, I'm just saying everyone seems dumbfounded about, and completely focussed on the money.

mangepenge
mangepenge

ha nice point raptor. your leaving out expenses in your calculation Brosim Yeah EA do make some great games. However when ea releases 15 games 1 is great. When Take Two releases 15 games 5 of them are great. EA is quantity, 2K is quality