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Take-Two reiterates EA rejection at annual meeting

By Tor Thorsen, GameSpotPosted Apr 17, 2008 5:07 pm PT

Executives of Grand Theft Auto publisher tell shareholders they will not yield to EA's $2 billion takeover bid--but take only two questions.

A month and a half ago, Electronic Arts stunned the game industry by announcing an unsolicited $2 billion takeover bid for Take-Two Interactive. The offer was a whopping 64 percent premium over Take-Two's closing stock price the prior day, and was regarded by analysts as being too generous for shareholders to turn down.

However, the board of the Grand Theft Auto publisher didn't feel the same way. On March 26, company directors--led by Chairman Strauss Zelnick and CEO Ben Feder--urged holders of Take-Two stock to reject EA's "inadequate" offer, which had turned hostile. EA then relented, giving its takeover target until 11:59 p.m. EDT on Friday, April 18--the day after Take-Two's annual shareholders meeting.

The day before said summit--which began this evening at 6:34 p.m. in New York City--Take-Two announced that its self-imposed April 15 deadline for shareholders to nominate opposing candidates for the company's board of directors or propose other new business had passed without incident. It then went on to say in a statement that "there will be no voting or decisions made at the annual meeting regarding EA's offer. However, we will be giving a brief presentation at the meeting on the reasons our Board rejected EA's offer."

Despite Take-Two's downplaying of the event, many believed that today's meeting would be the scene of high drama. The publisher's share price has been hovering around EA's $26-per-share offer price. If EA withdrew the offer and the price dropped, the board could become the victim of a stockholder coup much like the one that installed it last year. However, with analysts predicting that the April 29 launch of Grand Theft Auto IV will break entertainment-industry records, Take-Two could soon see its stock rise above current levels.

After a brief clip showing off the company's games, the meeting began with a rundown of the prior year's achievements by Feder. After noting successes such as BioShock being "the highest-rated 360 game of all time," the CEO almost nonchalantly announced that GTAIV has gone gold, and was "in production and in trucks en route to retailers." While largely assumed, the move confirms that the game would not be delayed even in the event of an EA acquisition, as some analysts theorized.

Then, it was onto a strongly worded warning to those present to abide by the rules of the meeting, and that only "stockholders of record" could present at the meeting. He then issued a stern warning that no one was to address EA's offer until the board had made their case at the very end of the presentation on why the bid was rejected.

After confirmation that enough stockholders were present for a quorum, several minutes of dull procedural proceedings ensued. Votes were cast to elect a board that would sit until the next stockholders meeting in 2009. Results of the vote were not announced at the meeting.

Finally, Chairman Strauss Zelnick took the stage to "highlight the value of the company" and explain why EA's offer was "the wrong price at the wrong time." He said Take-Two offered to meet with EA after the launch of GTAIV, which prompted EA to go hostile. He said the board's subsequent rejection was because "nothing in their conditional offer had changed."

"We're in the position of generated shareholder value in a sector at the fastest-growing segment of the entertainment industry," elucidated Zelnick. "EA's offer came at a highly opportunistic time, as it comes right before the launch of the next installment in the most successful franchise in this entire industry. We've received several advance reviews, and with one exception, they are all perfect scores. My mom couldn't write a bad review about this game."

Zelnick also said that EA's offer didn't take into account the rest of Take-Two's portfolio, which includes BioShock, Civilization, Midnight Club, and 2K Sports brands. He also pointed out Take-Two had "streamlined" existing operations as well as opened new offices in Asia.

"We don't think the EA offer properly compensates you, the shareholders, for the synergies EA would enjoy," continued Zelnick. He said analysts valued said synergies at over $210 million per year, with EA enjoying massive savings from not having to compete with Take-Two's sports line. "When we take on EA in sports head-to-head, we beat them every time," said Zelnick, referring to the two companies' competing NBA and NHL franchises. The companies had competing NFL and MLB series before EA locked down exclusivity for the former and Take-Two for the latter.

In conclusion, Zelnick reemphasized why he and his colleagues rejected EA's advances. "The board believes that Take-Two is worth more than $26 per share," he stated. "That said, we are 100 percent committed to creating more value for stockholders, and will consider all options, including staying independent."

Zelnick went on to emphasize that the Take-Two board would also consider a buyout from anyone for the right price--but on its own terms. "We are more than ready to begin formal discussions on April 30, a date which will provide us with optimum position and security," he explained. "In the interim, we are open to informal talks and will sign confidentiality agreements."

Finally, he closed on an upbeat note, proclaiming, "Interactive entertainment is the most profitable section of the entertainment industry. This is the sweet spot."

The floor was then opened to stockholders' questions--of which there were only two. First, Zelnick declined to answer a query as whether Take-Two had entered into any confidentiality agreements with other potential buyers, as it has previously publicly hinted. Secondly, he refused to comment on today's announcement that the Federal Trade Commission was investigating the possibility that an EA takeover could violate antitrust laws. Then...the meeting was unceremoniously adjourned, leaving analysts and reporters to ponder Take-Two's next move.

199 Comments

  • Sh30g0rath

    Posted Jul 1, 2008 10:13 am PT

    Boo hisss...EA suck. Good to see someone standing up to them.

  • Tarek-Kadoura

    Posted Jun 23, 2008 5:17 am PT

    I hate Rockstar because they aren't gonna release GTA IV for PC.
    I bought a heavy PC for it this year the "it's only for next generation consoles the PS3 and the Xbox360"
    all what they care about is money.

  • IddyB

    Posted Apr 29, 2008 2:40 pm PT

    May syphillis come with swift wings to the board of directors at EA. F*ck EA. Take-Two gang-rapes you front, back and sideways. Rockstar rules!

  • mrjasler

    Posted Apr 27, 2008 10:55 pm PT

    NHL 2k wasn't better than EA's .. NBA 2k was better though.

  • King_Jeremy_77

    Posted Apr 27, 2008 12:55 pm PT

    I'm sick of EA.

  • F4ll3n_1

    Posted Apr 27, 2008 8:35 am PT

    It's about time somebody told EA the meaning of the word "no". If they ever did take over T2, then the only major competitor left who they couldn't accquire would probably be Activision-Blizz. Not sure about Codemasters.

  • thenephariouson

    Posted Apr 27, 2008 4:26 am PT

    Well Done Take Two!! Stick to your guns boys!!

  • Tombackman_5

    Posted Apr 26, 2008 4:45 pm PT

    Keep it real rockstar! Don't let them corporate stoops water down your inventive and revolutionary products!

    PS NBA Live Sucks every year! Keep 2K Strong

  • Ra-Devil

    Posted Apr 26, 2008 4:42 pm PT

    First, EA would buy out several other lesser known companies, just for their titles, then M$ would buy EA in what would start as a "partnership", but eventually, M$ will "dissolve" their groups into the rest of the M$ Gaming Studios branches, and the developers from previously known Bio-Ware and the game Mass Effect would meet the team that was part of the Golden Eye creation, as well as the Mech Assault and Shadowrun guys, and they'd get together to make a game so incredible, even M$ craps bricks....

  • Lordofultima

    Posted Apr 26, 2008 8:15 am PT

    With any luck maybe Take Two will get swept up by Activision, so at the very least there can still be competition in the sports category. Take Two could probably also keep their namesake, if that were the case.

  • thenephariouson

    Posted Apr 26, 2008 3:00 am PT

    What next? a hostile bid for Valve?? F%$K THAT!!!!!! It makes me laugh that with all that money and all those employees EA cant come up with 1 good innovitive game! Pathetic!!!!! I also think MS should buy EA, then close it down lol

  • L1qu1dSword

    Posted Apr 25, 2008 1:00 pm PT

    I hate EA. I hope Take 2 fends off this hostile takeover.

  • Link_Destined_1

    Posted Apr 24, 2008 5:03 am PT

    Good move by Take-Two. At least we can be assured that GTA will continue to not suck. I'm not a Grand Theft Auto fan, but I'd hate for Rockstar to be constricted by EA's overemphasis on profit rather than on just making great games. I've heard it from the mouth of a representative of Rockstar itself: "we make games that WE want to play". As selfish as this seems, it turns out they know their target market to a "t". It's also the sort of company, I was told, where coming in for an interview while wearing a suit and tie will get you funny looks from the staff. It's a very "cool" place to work, I heard.

    And I think EA would crack down on that, which is NOT cool.

  • XxCiNCYSK8eRxX

    Posted Apr 23, 2008 3:38 pm PT

    magusat999 i couldnt of said it better, people are brain washed by ea, each year they cough up $60 dollars for the same cookie cutter game.

    i give them props for making skate which was an original idea but on the other hand Rock Band was all Harmonix. EA is like Neversoft, out for money and not reinovating the series. Madden is like Tony Hawk same objective and some new rosters/skaters.

    EA has all that money and talent, why not invest on some new products and game series'.

  • tig1979

    Posted Apr 23, 2008 1:12 pm PT

    Basically they are saying their share prices could drop then the shareholders would be severly put out, lets be honest though, when gta iv hits the shelves it is likely to be one of if not the biggest selling game of the year their share prices will fly, GL take two stick to your guns!

  • jknight5422

    Posted Apr 23, 2008 10:40 am PT

    EA should go back to focusing on making new games instead of buying up the remaining game development market. We don't need a Starbucks/Wal-mart/McDonalds company of the videogame industry.

  • kaziechameleon

    Posted Apr 23, 2008 5:33 am PT

    oh, the anti trust law violation could be one great government regulation that the consumers are happy for.

  • magusat999

    Posted Apr 22, 2008 5:39 pm PT

    EA has like 12 million employees, but they cannot come up with an original game to go up against GTA. They are just parasites, leeches who want to live off of, and ultimatley stifle the creativity and independence of others.

    It's a shameless, obvious move to stop Take-two from gaining market share. They show desparation by applying pressure for them to accept before they see they GTA numbers. EA probably wants to get them first so they can reschedule the release so it won't hurt thier planned release schedule - any mule can see that.

    EA has enough already - let someone else grow. Get off of your lazy, NFL repeat making butt, EA and show some creativity of your own for once.

  • jeremiah06

    Posted Apr 21, 2008 8:39 pm PT

    Oh god if EA takes over Take-Two then it will be the fall of good sports games and get ready for a new GTA every year

  • DSBNH_basic

    Posted Apr 21, 2008 6:03 pm PT

    This was a profoundly stupid move for the pockets of Take-Two shareholders, but a smart one for the sake of gamers. While there is nothing inherently evil about EA, the idea of one company controlling that much of the market is scary and would not be a good thing for the quality of games. Monopolies are never good for the quality of a product. More competition means more effort on the part of all involved to create a better product.

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