Take-Two calls EA buyout offer 'undervalued'

Publisher's board of directors dismisses proposed $2 billion deal as an opportunistic attempt to get on the Grand Theft Auto IV bandwagon; says it will initiate talks after game's release.

Earlier today, Electronic Arts revealed it had made an all-cash offer of nearly $2 billion to acquire rival publisher Take-Two Interactive. Take-Two's board of directors rejected the proposal, leading Electronic Arts to go public with the deal today to inform the Grand Theft Auto IV publisher's shareholders exactly what their corporate leadership is passing on. Take-Two has responded this afternoon with its own announcement to explain why the directors had balked at the proposed acquisition, saying neither the time nor the price was right.

"In addition to undervaluing key elements of our business, EA's proposal fails to recognize the value we are building through our ongoing turnaround efforts, which will further revitalize Take-Two," explained the publisher's chairman of the board, Strauss Zelnick. "While we have made substantial progress already, the turnaround of our business which we initiated in June is not yet complete, and we believe its benefits have not been recognized in either our current stock price or in the value of EA's proposal."

Take-Two said the proposal "substantially undervalues" its franchises, creative talent, and consumer loyalty. As for the timing, the publisher suggested its rival was trying to ride the coming wave created by the Take-Two-owned Rockstar Games' Grand Theft Auto IV, which should arrive in stores on April 29.

"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," Take-Two said in a statement. "Furthermore, the offer values the company at a significant discount to its public peers and does not compensate Take-Two for its intrinsic value and the substantial synergies that the proposed combination would create."

Despite the tough talk, Take-Two didn't rule out the possibility of an acquisition at a slightly later date. The publisher said it was willing to start a dialogue with EA to see if they could agree on a price, but that it would defer such discussions until after the release of Grand Theft Auto IV.

"[We] offered to initiate discussions with EA on April 30, 2008 (the day after Grand Theft Auto IV is scheduled to release)," Zelnick said. "We believe 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."

Zelnick also expressed other concerns in a letter sent to EA CEO John Riccitiello on Friday and reprinted in today's announcement. Specifically, he questioned the impact such an acquisition would have on developers fearful of layoffs and studio closures.

"[As] we have all seen time and again, the process surrounding acquiring a public company from start to finish is complex, uncertain, intrusive, and distracting," Zelnick said, "and we believe it would be especially so to the creative artists at the core of our business and to all those who may be displaced by a transaction."

242 Comments

  • Duke_Bootee

    Posted Mar 17, 2008 2:48 pm PT

    EugenioK is right I think we should Boycott EA Games. I don't want EA's half assed take on what GTA should be. The government should split up EA because its becoming a monopoly

  • EugenioK

    Posted Feb 26, 2008 4:35 pm PT

    If companies like EA get a hold of the market they will ruin it, imagine GTA 5 being at the same level at EA mega expensive The Godfather. after playing playing that game i swore never to buy anything with an EA logo. EA seems to be concerned with onething and onething only making more money. which offcourse is by itself not bad but there games suck most of the time they are unfinished as they are more concerned with getting it done before Xmas then producing a quality game. I'm not a hate mail type but I ask you this why do we support a company by buying there games when they obviously have no love for games or us gamers and will ruin the sports games and eventually other markets( like our dear GTA series) as well. it will be a sad day for us gamers when EA take over Take two. and seriously it's been a long time since they gave a game that was worth it's value, I'm not just jumping on the EA hate train I'm driving it.

    trust is a precious thing and every time I spent 60 euro on a game I trust the company that made it to give at least my money worth EA game broke that rust over and over and over again so yeah the idea of EA taking over take two gives me a chill

  • LoganFerguson

    Posted Feb 26, 2008 1:49 pm PT

    "Concerns about the 2K Sports brands, and the damage that the acquisition might do to competition were generally skirted. When the matter was pressed EA made it clear that it felt there was still lots of competition in the sports space, with the likes of Wii Sports, the Tony Hawk franchise, Virtua Tennis and Hot Shots Golf likely to keep EA Sports on its toes for some time. "

    Of the developers Take-Two owns, R* is obviously the biggest and most famous. But IMO, this buyout is really about 2K sports. Yes, EA wants to grab ahold of GTA IV before it's released so they can reap the profit of probably the most anticipated video game in several years. But they also want to kill their sports competitors. Look, they wouldn't even acknowledge the fact that the major pro sports franchises would be completely locked up by EA Sports now.

    The problem is, EA Sports can't even make a quality sports game NOW. The only reason they weren't COMPLETE garbage was because they had to try and do something to make people not by the 2K sports games. But now, with a lack of competition? Every sports title will be a complete waste of money every year. Remember how 2K sports started pricing their games at $39 or $49, brand new, and EA Sports had to do likewise? Now we'll see rehashes of the same game every year for $59.99.

    I used to love EA Sports, back in the day. My little brother hated the slogan "If it's in the game, it's in the game!" because I played so many of their games in the early 90s. But now, I can't stand their games. I rent EA Sports titles now, and compare them to 2K Sports titles, to see if any are worth buying. And they're never worth it. I'll never forgive EA for letting slip the stupid little bug in NBA Live 07 where the computer failed to substitute for it's players during games. That is GLARING mistake, one of the biggest I've ever seen in a sports title. So what, I'm playing 5on5 basketball? DId the NBA shorten it's rosters from 12 to 5? WTF? But yet, did ANY game review website happen to mention that oversight? NO. Why? 1st off, they aren't really sports gamers, and they only play 5 minute quarters (this isn't arcade sports, MORONS), so they never noticed that their opponent never substituted. Second, just like Gamespot here, all of the game review websites get paid money by advertisers, non bigger than EA, and if they point out glaring flaws or bugs, the publishers will pull their advertising money. (Case in point, this happened to Gamespot last year, and cost a reviewer his job for giving an advertisers top release a poor review).

    Will the FCC block this buyout? No. They don't block buyouts and mergers anymore. They wait until an industry is fully monopolized by a few corporate giants, and then force a breakup. That's what we get for voting Republicans into Congress for the past 20 years.

  • Bgrngod

    Posted Feb 26, 2008 12:34 pm PT

    The stock is going to see a surge after GTAIV. That is basically a no-brainer. If I had a few thousand spare bucks laying around I'd but stock now and sell it after it goes up.

    Take-Two did the right thing by saying no.

  • knetzerthegreat

    Posted Feb 26, 2008 12:29 pm PT

    Now Take-Two? Who the hell cares about who-put-what-in-whos-@$$ in baseball, why can't congress spend it's time doing something useful...like preventing EA from taking over the ENTIRE game industry?!? The last thing I want to see is a Madden-like anual release of GTA that gives you HALF the map, but you have to cough up an extra $20 bucks to unlock the other half, then another $10 for cheat codes, plus $5 a pop for extra cars. "GTA 2009" "GTA 2010, now with character creater!" "GTA 2011, starring Tiger Woods, with narration by Madden!"

    "Now the point of carjacking is to get the driver out of the car and then to take the car he was driving. I like to call it a TOUCHDOWN!"

  • MedevilDragon

    Posted Feb 26, 2008 12:27 pm PT

    I hope that Microsoft, Sony, or Activition will buy Take-Two so they can continue make 2K Sports games.

    You can say what you want about Microsoft, but at least they don't touch or mess with the games they buy. EA ruins everything the buy!

  • Nickolai1979

    Posted Feb 26, 2008 12:19 pm PT

    "Publisher's board of directors dismisses proposed $2 billion deal as an opportunistic attempt to get on the Grand Theft Auto IV bandwagon; says it will initiate talks after game's release."

    Ha! That made me laugh. Pff.. EA. Suckas.

  • HALCONAZUL

    Posted Feb 26, 2008 12:17 pm PT

    EA is the videogame market WAL MART

  • RageSet

    Posted Feb 26, 2008 12:05 pm PT

    Boge,

    Take-Two Interactive board members can keep denying EA all they want, but then EA can do a hostile takeover and just buy Take-Two stock. If they are the majority stockholders, they can fire all of the Take-Two management and place their own at the helm and thus do whatever they want. There are no laws in place to protect this hostile takeover from happening, even though it will allow EA total domination over the sports gaming market.

    EA can argue that they will allow 2K Sports to continue to make sports games, but would you as a business owner pay to allow two of your development teams to make (essentially) the same product that will compete with each other for market share and retail space?

    Not only will EA get one of the biggest gaming franchises in GTA (worth the 2 Billion alone), but they can cut out their last main sports competitor. I wish google had an interest in gaming, maybe they could do for gaming what they did for computer software/services.

  • ck02623

    Posted Feb 26, 2008 12:00 pm PT

    "Boge

    Everyone is blaming EA for these buyouts, but it takes two companies to merge. If Take Two gets bought out, that's their fault. They could say no again and again. So who do you blame?"

    No it's not smartie-pants. Didn't you read the article about the hostile takeover? EA is saying that even if T2 doesn't sell, they're going to buy up all of the public shares so that they will own the company anyway, and then show the T2 board the door.

    Research before you vomit out your opinion.

  • Boda3000

    Posted Feb 26, 2008 11:10 am PT

    It seems EA thinks that making more money is just done by buying other companies which have good titles (GTA4). Instead, they should invest their money on something useful and their own company to make some good games. Buying other companies is just cheap. Maybe EA is just scared that they don't have many good titles anymore, compared to Activision-Blizzard, and then they try to buy existing titles instead of making new ones or improving what they already have.

  • mergedsalem23

    Posted Feb 26, 2008 10:55 am PT

    We gamers all know that if it wasn't for the Madden series EA wouldn't be able to make offers to different company's, EA need to used the talent they got and not trying to buy a publisher out. EA bascially saying to me if I apply for a job as a game designer they won't me reconision for my hard work. Take Two don't ever forget your talent in your company.

  • Boge

    Posted Feb 26, 2008 10:43 am PT

    Everyone is blaming EA for these buyouts, but it takes two companies to merge. If Take Two gets bought out, that's their fault. They could say no again and again. So who do you blame?

  • mergedsalem23

    Posted Feb 26, 2008 10:34 am PT

    I think some gamers are dumb, if EA buyout TT; won't be run as and Indepentdent publisher anymore. All the good talent will disappear and EA isn't really insterested inTT they are interested in GTA4. To me EA threw up a red flag saying I want GTA4 and not really interested in TT.

  • ck02623

    Posted Feb 26, 2008 10:31 am PT

    http://www.destructoid.com/15-reasons-why-ea-is-pure-evil-66852.phtml

    I hate EA.

  • mergedsalem23

    Posted Feb 26, 2008 10:12 am PT

    Don't do it Take Two!

  • King9999

    Posted Feb 26, 2008 10:12 am PT

    This is funny. Analysts say that EA is "overpaying" and Take-Two says $2 billion isn't enough.

  • louzero

    Posted Feb 26, 2008 10:10 am PT

    I really hope this doesnt happen. Everything EA thouches turns to suck. They just love to have one good idea and run it into the ground and kill it. IE: Madden, Need for Speed, and worst of all......*snifle, wipes tear* Road Rash.

    Also, has anyone here ever seen someone on XBL with a gamer pic of the EA logo? EA gamer pic=ghey!

  • MXVIII

    Posted Feb 26, 2008 10:10 am PT

    bjmage16 I can understand People hating EA for some of the truly lackluster titles they produce, but the real beef with EA isnt really the games, but how they treat their artists, even Take two knows that if the take over happens, many great developers will either become under paid, or replaced. It would suck to work your way up in a company and make someting of yourself, only to be destroyed by another company that just doesnt give a damn.

  • Panta

    Posted Feb 26, 2008 10:07 am PT

    I hope EA doesn't buy out Take Two. They already got Pandemic, and I'm hoping all of these delays arn't caused by them.

  • bjmage16

    Posted Feb 26, 2008 10:02 am PT

    People seem to forget that EA publishes more AAA titles than not. EA taking over a company doesn't mean the end of that company's good games. Whoever says otherwise is just jumping on the EA-hating bandwagon.

  • Loucetios

    Posted Feb 26, 2008 9:58 am PT

    ManOfDaHour
    luckily they can't get the new activision, they'd have to spend almost ALL their money since its almost the same worth as EA

  • infrared13

    Posted Feb 26, 2008 9:57 am PT

    Someone Stop EA already!!! Take 2 please don't do it!

  • ManOfDaHour

    Posted Feb 26, 2008 9:56 am PT

    If EA takes over Take-Two what will happen to NBA 2K series!?!?!? I would hate for NBA Live to be the ONLY choice for NBA sports hoops. I don't like how EA or many other companies like EA corner the market and buy out the competition. It gives consumers less choices. It happens all the time, but now I'm getting upset about this!!!!! Who is EA going to try and by next?????? ACTIVISION??

  • Loucetios

    Posted Feb 26, 2008 9:46 am PT

    take two says EA is not paying enough but analysts say Ea is paying too much? who is right/ who is wrong/ see it tonight at the publisher battle royal!!

  • MXVIII

    Posted Feb 26, 2008 9:06 am PT

    commandokiller EA didnt Aquire Vivendi. Vivendi Merged with activision dude. And before you say "No that was blizzard" remember that Vivendi is Blizzard's parent company.

  • WiiNut6493

    Posted Feb 26, 2008 7:07 am PT

    Marcosnow06, you couldnt have put it any better.

  • MarcoSnow06

    Posted Feb 26, 2008 6:19 am PT

    The folks at EA are money-grubbing whores, plain and simple, latching onto any company that produces AAA titles and turning them into sequel factories. The problem is they are RICH money-grubbing whores. Let's hope all this game acquisition crap ends sooner rather than later (although that's just wishful thinking on my part).

  • mariotonna

    Posted Feb 26, 2008 4:43 am PT

    Remember what EA did to Westwood Studios? Exactly.

  • Diduseeasign

    Posted Feb 26, 2008 1:41 am PT

    It's never gonna happen, if it does, it will purely be on take twos own terms.
    Take two value creativity, unlike EA.

  • devil_1994

    Posted Feb 26, 2008 1:37 am PT

    damn i hate ea

  • TehUndeadHorror

    Posted Feb 26, 2008 1:16 am PT

    I wish EA would just crawl into a hole and DIE.

  • nrCooldude

    Posted Feb 25, 2008 11:54 pm PT

    damn it! gta is headed for doom if take two sells out 2 ea

  • SpinoRaptor

    Posted Feb 25, 2008 11:34 pm PT

    It is clear that EA doesnt really care about Take two. They're just doing it for GTA IV. Otherwise they would have made an offer long ago.

    God EA sux balls.

  • BullOfRage

    Posted Feb 25, 2008 11:07 pm PT

    Take Two accepting a takeover from EA will be like shooting all our consoles and PC's about 50 times with a shotgun. It will completely wreck GTA for everyone, it will scrunch up all that Rockstar and Take Two's hard work and throw it in our faces. DAMN YOU EA

  • Dman4Life1217

    Posted Feb 25, 2008 10:30 pm PT

    I really don't like this at all. EA trying to buy out all the major 3rd party developers. Buying take two would not only squash any relevant competition they have in the sports department from 2K sports, it would also regain them the lost MLB License. EA using underhanded tactics by releasing their letter of intent to the Take Two shareholders is just beyond dirty. Hoping to force the shareholders to put pressure for a buy out. And I do agree that they are severely undervaluing Take-Two, and is just looking to capitalize on GTA4's wave, hoping to regain some funds from the Bioware/Pandemic purchase.

  • tcardone05

    Posted Feb 25, 2008 10:19 pm PT

    Somehow, I think EA will be fine.

  • yellow013

    Posted Feb 25, 2008 8:26 pm PT

    pwnt2ea

  • ebonyflame

    Posted Feb 25, 2008 8:13 pm PT

    Not only would Take Two cease to exist and most of its people fired, I would cease to buy any title formerly published by that company after EA has touched it as I do not buy EA games now.

  • commandokiller

    Posted Feb 25, 2008 8:08 pm PT

    Man, EA is like Pacman, just gobbling up other publishers. I mean, they already acquired a bunch of others like Vivendi. There has to be like some anti-monopoly law to stop them from totally taking over the market and pumping out more crappy games...

  • RaiKageRyu

    Posted Feb 25, 2008 8:01 pm PT

    EA EATS ANYTHING

  • tratyu92

    Posted Feb 25, 2008 7:53 pm PT

    EA - A buch of money hungry ********

  • spawnassasin

    Posted Feb 25, 2008 7:49 pm PT

    hmmm i think TT is worth more $2 billion
    but good for you TT i hope EA doesnt buyout TT

  • Fauij

    Posted Feb 25, 2008 7:42 pm PT

    EA will probably make gta come out every year, only a suckier one every year

  • puppiemaster

    Posted Feb 25, 2008 7:23 pm PT

    M$ should buy take2

  • tekmojo

    Posted Feb 25, 2008 7:21 pm PT

    Oh god just think how the EA trax would be for GTA

  • heron_noleto

    Posted Feb 25, 2008 6:17 pm PT

    In some years from now, EA is going to be releasing their own console.
    Mark my words. They will take over the industry and all hope will be lost.
    Hua hahahahahahahah!!!!

  • Craig410

    Posted Feb 25, 2008 6:05 pm PT

    Thank you Take-two. your my hero.

  • cbl120

    Posted Feb 25, 2008 5:11 pm PT

    i hope to god take two turns down EA again in the future, if games like GTA were published by EA they'd probably strip them of all their 'risque' material just to keep people happy and keep making money

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