FTC double Takes on EA buyout
US regulators want more time, info to assess anticompetitive implications of Take-Two takeover.
Later today, Take-Two Interactive will hold its annual shareholders meeting, in which board members may or may not take Electronic Arts up on its $26 dollar-per-share buyout proposal. Regardless, the US Federal Trade Commission may step in to halt the merger before it can commence.
EA said today that it has received its second request for information from the FTC regarding its Take-Two takeover intentions. "While EA believes that its proposed transaction with Take-Two would not be anti-competitive, the FTC has not yet reached any conclusions regarding the proposed acquisition and has indicated that it needs further information and additional time to conduct its review," the publisher said in a succinct statement.
Whereas the proposed Activision-Vivendi merger has by all accounts gone swimmingly since it was announced in December--most recently gaining the blessing of the European Union's antitrust body--EA's proposed buyout of Take-Two has hit substantial turbulence. After EA offered a 64 percent premium in a buyout bid worth $2 billion, Take-Two's board outright rejected the proposal, saying among other reasons that the offer undervalued the company.
Take-Two's unwillingness to entertain acquisition talks until after the April 29 release of Grand Theft Auto IV prompted significant shareholder unrest, resulting in a lawsuit and the publisher's two largest investors significantly reducing their stake in the company. Taking further counter-takeover measures, Take-Two's board established a "poison pill" clause, which would allow for the creation of new shares in the company if any individual shareholder acquires 20 percent or more of the company within six months of its adoption.
Take-Two's continued obstinacy toward the deal prompted EA to take its buyout offer hostile, appealing directly to the publisher's shareholders with its $26 per-share tender offer. EA's offer expires tomorrow at 11:59 p.m., and is conditional on Take-Two executives dropping the poison-pill provision in relation to EA.
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