[Posted on March 26, 2008 - 10:49 AM]
E-mail
del.icio.us
Technorati
DiggVideo game publisher Take-Two Interactive Software Inc. on Wednesday recommended its shareholders reject a $26-per-share, $2 billion takeover offer from rival Electronic Arts Inc.
Take-Two called EA's hostile offer "inadequate," "opportunistic" and contrary to shareholder interests.
"Our stockholders' interests would hardly be served by accepting an offer from EA at the wrong price and the wrong time," said Take-Two chairman Strauss Zelnick in a prepared statement. "As a result, the board recommends that stockholders not tender any of their shares to EA."
Take-Two, which publishes the "Grand Theft Auto" game series, said it would explore strategic alternatives, including a combination with third parties or with EA, or remaining independent.
"Grand Theft Auto" is Take-Two's flagship brand, and the results of the latest instalment "Grand Theft Auto 4" will become a big driver of the company's future valuation. The game is expected to be the best-selling video game this year.
New York-based Take-Two said it has already received "indications of interest from third parties with respect to possible business combination" since EA first made its overture, but has held no talks as yet. However, the video game publisher did note that before the release of Grand Theft Auto 4, it is willing to enter into confidentiality agreements with interested parties, including EA.
"With one of the strongest portfolios of intellectual property in our business, a superb creative and business team, and a revitalization plan that is beginning to deliver results, Take-Two is uniquely positioned to create stockholder value in an industry that is enjoying the highest growth rates of any entertainment medium," Zelnick said.
Other popular games in Take-Two's portfolio include "BioShock," "Major League Baseball 2K" and "Midnight Club," and earlier this month the company forecast quarterly earnings above Wall Street estimates, citing better-than-expected advance orders for "Grand Theft Auto 4."
EA, the world's largest video game publisher, is eyeing those franchises as it faces stepped-up competition from rival Activision Inc., which is merging with the video games unit of French conglomerate Vivendi SA.
Morgan Stanley is the dealer manager for the tender offer, and Georgeson Inc. is information agent for EA. Bear, Stearns & Co. and Lehman Brothers Inc. are serving as Take-Two's financial advisers and Proskauer Rose LLP as its legal adviser.
Take-Two also took several steps to prevent EA from going through with a hostile takeover. It adopted a 180-day shareholders' rights agreement, also known as a "poison pill." It kicks in if an outsider acquires 20% of Take-Two's shares or if an existing shareholder who already owns this much buys another 2%.
Zelnick said the rights agreement "will not, and is not intended to, prevent a takeover of the company on terms that are fair to and in the best interests of all stockholders."
Take-Two also moved its upcoming annual shareholder meeting to April 17 from April 10 and amended its bylaws to give shareholders more time to nominate board members. - Donna Block
