As most of you have probably heard, EA recently attempted a less than friendly takeover of Take Two. Take Two refused the offer, and the past few days have been a flurry of analysis and news tidbits on the matter. Behind the jump lies our humble attempt to compile a comprehensive look at the topic as it stands today.
The story begins with a February 19th letter from EA CEO John Riccitiello to Take Two head Strauss Zelnick offering an all cash buyout of the company. EA offered 26$ a share for the company, which at the time amounted to a 60% premium over the trading price of Take Two stock. Take Two quickly responded, and soundly rejected the offer. Zelnick had this to say in an official statement.
Electronic Artsâ€™ proposal provides insufficient value to our shareholders and comes at absolutely the wrong timeâ€¦ Thanks to the extraordinary efforts of our creative and business teams, Take-Two has made enormous strides in the past 10 months toward our common goal of being the most creative, innovative and efficient company in our industryâ€¦
Given the great importance of the Grand Theft Auto IV launch to the value of Take-Two, the Board has determined that the only prudent and responsible course for our Company and its stockholders is to defer these discussions until immediately after Grand Theft Auto IV is released.
Most of this story broke on Sunday, the 24th. When the markets opened Monday, Take Two suddenly seemed like an excellent buy, and the share price jumped considerably, up over 47% over its closing price on Friday. Trading volume of the stock also increased almost ten fold. By the time the markets closed on Monday, Take Two shares stood at almost 27$ a share, a 54% increase over its last closing price.
The latest development comes today with news that EA may attempt a shareholder led takeover of the Take Two board of directors at the company’s annual shareholder meeting. Gaming industry analyst Michael Pachter notes that according to Take Two corporate bylaws, the nominations must occur by the end of business today.
While this is a pretty big deal to the industry as a whole, why should you care? Aside from the obvious prize of Grand Theft Auto 4, Take Two also brings much more to the table for EA, as well as for consumers. Consider that 2K sports, EA’s main competition in the sports fields where it hasn’t obtained a licensed monopoly, is a subsidiary of Take Two. Michael Patcher believes that this is the real impetus behind the acquisition bid, and that GTA4 is simply the cherry on top. If EA is successful in its bid, they will essentially have no competition in the sports arena, which will undoubtedly be bad news for consumers. Do you think that EA will manage to pull this one off? If they do, how serious an impact will this be on the industry as a whole?
Thanks to the many people who contributed various sources for this story.