EA’s bid for Take-Two gets hostile

By Yi-Wyn Yen

Its $1.9 billion bid to buy rival Take-Two (TTWO) having been rejected by management, video game giant Electronic Arts took its case directly to the shareholders Thursday morning.

At stake is the future of Grand Theft Auto, a relentlessly violent action-adventure that has grown into one of the most valuable video game franchises in the business. Earlier this week, Take-Two raised its sales estimates for the current quarter to $400-$500 million, based on pre-orders for the next version of the game, Grand Theft Auto IV, due out April 29.

With the new release just weeks away, EA (ERTS) wants to close a deal quickly. The company has been on a buying spree of late to replace its own aging franchises — such as the Madden Football series. It is offering Take-Two shareholders the same $26 a share that the company’s management had already turned down. Its offer is set to expire on April 11, the day after the Take-Two’s annual shareholder’s meeting — putting maximum pressure on the company’s leadership.

Take-Two executives have repeatedly said that $26 a share is too low, but their shareholders may disagree. Take-Two’s two biggest, Oppenheimer and Fidelity, have sold a significant portion of their shares for less, it was revealed earlier this week. Oppenheimer has cut 50% of its holdings to 8.8 million shares and now has an 11.5% stake in the company. Fidelity’s stake is now down to 2.75% from 14.7%.

“EA may have offered more if Take-Two had come to the negotiating table,” said Colin Sebastian, a gaming analyst with Lazard Capital Markets. “But there was no bidding war going on. EA thinks shareholders may be more favorable to the deal.”

“This is a great opportunity for Take-Two shareholders,” said EA chief executive John Riccitiello in a statement. “We believe Take-Two investors will see our tender offer as the best way to maximize the value of their investment.”

Shortly after, Take-Two urged shareholders to “take no action.” Take-Two’s board said it would review the offer and instruct shareholders of its decision within 10 days.

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Filed under Take-Two, Video games, ea

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EA should not be allowed to proceed. All they do is churn out the same rubbish year in/year out.

And it is the casual gamers who fund them, not the people who know anything about the industry.

Companies like EA are a cancer in the industry.

Posted By Paul, Europe : April 18, 2008 9:32 am

To Jeremy - The reason other games don’t have the NFL players and teams, is because EA bought the license from the NFL, which means they effectively created a monopoloy. Do you think that’s good for the consumers (having competition to entice good pricing and game development) or do you think that’s good for the already-exisiting Madden game which is your opinon cutting edge? Why they felt the need to buy the licensing rights, if not only to chop the competition at its knees? For Madden fans it doesnt even make a difference because they were going to buy the game anyway, but to gamers looking for a great football game, their opportunities are limited to what EA comes out with. I guess adding Take-Two would contribute to EA’s bigger plan of having control of every major franchise they can acquire. Is this good for the consumer? You tell me.

Posted By Jay, New York, New York : March 18, 2008 2:36 pm

Madden being the best sport game? whatever! MLB The Show is the best sports game franchise. It boast great game play, solid graphics and well put up and defined modes.

I hope we won’t see GTA ‘08, GTA ‘09. I hope RockStar wil leven be allowed to continue that IP.

Posted By Jonathan, Quebec, Montreal : March 17, 2008 4:51 am

You are so far from wrong its not even funny. How can you even say its a better game when it doesnt have the nfl permission to use player names?

Madden has always been the cutting edge of football games, even sports games in general. That is why EA bumps every August and September and people line up to get it.

Any lines for the taketwo football, besides the line of crap you are peddling?

Go ERTS !!!(but drop first so I can buy you).

Posted By jeremy, seatown WA : March 14, 2008 9:36 pm

E.A. nat possibly have the third best football game behind the NFL2K series.

Posted By macdisser,bronx,new york : March 14, 2008 7:08 pm

Electronic Arts is also trying to stifle and dismantle Take Two’s All Pro Football — which is a better game than Madden Football. Electronic Arts knows it has the weaker football game, and Take Two’s All Pro Football stands to make money, even though Take Two doesn’t have a license from the NFL. Shame on Electronic Arts.

Posted By Michael, Olney, MD : March 14, 2008 9:26 am

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