Is Take Two in Play?

March 19, 2007
Suddenly, Take Two Interactive may be for sale.

In recent weeks there has been much coverage of a well-publicized shareholder revolt that was expected to seize control of the troubled game publisher at Friday's shareholder meeting.

That meeting won't take place, however.

This morning comes word via Take Two press release that the shareholder meeting has been rescheduled for March 29th. The time and location will be announced later today. Rather cryptically, the press release says:
The purposes of the Board's actions are to provide additional time to review the proposed actions of the shareholder group and also to evaluate alternative courses of actions that could potentially be presented to the shareholders, including a possible sale of the Company.

The current board, of course, is slated to be shown the door along with CEO Paul Eibeler should the shareholder coup, led by Strauss Zelnick, succeed. It seems likely then that the board would entertain other, more favorable options. Could the management group be looking to take T2 private?

We'll certainly hear more about this from the financial sites as the day goes on.

Comments

ChrowX: it could go that way, but its unlikely - as I understand it shareholders representing 46% of the shares want a coup. Upon doing so there would be a vote - obviously the 46% who started the coup would vote to give Eibeler etc the boot, they would only need a relatively small number of the remaining shareholders to side with them to get what they want.

Iirc a 'sale' may not neccesarily mean a buy out by another company anyway. I don't see the format of Rock*'s games changing significantly through this though. The whole reason Rock* has been so lucrative a market for Take Two is because of the tireless efforts of people like Jack Thompson and Hilary Clinton to advertise and make sure everyone who hadn't heard about it heard. Human nature did the rest in that case and made the series a smash hit.

Basically, as long as it gets free advertising, no large company board, be it Microsoft, Sony or even EA would throw away a cash-cow format like GTA. It's almost been turned into a cult thanks to those that hate it.

I think that's one of the things that really annoys me about it all, if it hadn't been for Anti-game activists, GTA would probably be fading out as a genre now.

Somehow if this happens, I can easily see it being a bid between EA and Microsoft.

EA on the one hand is the world's biggest game publisher and would love to find a way to maintain it and even become bigger and taking out their biggest of competition and absorbing their popular titles would be the perfect way to do that.

If Microsoft did it on the other hand though it would allow them another one-up against Sony as they would have more power in terms of exclusives and timed exclusives, so taking away GTA, a Playstation system seller, would be a kick in Sony's nuts.

Considering the two, I'd rather Microsoft do it as they can actually make quality products and Sony deserves it (now grinning evil!).

I can't imagine this group would want to take the company private as in spite of recent events, Take-Two's stock has been steadily increasing (no thanks to the current board.) It also seems strange to me that they'd want to sell the company as it is currently debt free and if they could turn it back to profitability, would be a much better long-term investment if left independent. In any event, I really hope they don't sell as competition is rapidly diminishing in this industry and that isn't a good thing for gamers. If EA bought them, you'll see the superior 2K Sports series dissolved and folded into EA Sports and if Microsoft bought them, you'd likely see 2K Sports sold off as it was formed when Microsoft bailed out of the sports market.

Meh, as far as their business practices are concerned, I'm not impressed by Take Two, not even particularly fond of their games to be honest, not sure what's going on here, but it sounds like damage control.

It shouldn't have any effect on the case against JT, that was a corporate decision, and should remain in place even with a change of board, the smear campaign led by Jack is trying to create a chilling effect to T2 games, regardless of who is in charge.

I would not want them to be bought by MS, Sony or Nintendo. They need to stay multi platform.

There would be a lot of interested buyers. Take 2 owns quite a few hot properties (not just GTA, but 2K Sports) but has had its price driven down through mismanagement. If Microsoft buys them, maybe Bungie can get their Myth and Oni properties back that Take 2 got in exchange for their share of the company when Microft bought Bungie.

(1) What effect would taking T2 private have?
(2) What effect would any of these decisions have on any reported lawsuits against them or brought by them (note the recent lawsuit agianst John Bruce, for example)?

As an aside, they are welcome to give T2 to me. I'll turn it into the game company equivilant of Microsoft. :)

Ok, so maybe that's not necessarily a "good" thing. :)

nightwng2000
NW2K Software

Reading back through all these Take Two/Jack posts and linking off to other media sources is really giving me a headache. *sigh* It all just seems increasingly moronic, between Take-Two making bad decisions, and Jack prancing about in the fashion of somebody who says he can't be blamed as he's doing "The Lord's Work". Makes me glad I'm an atheist.

OK...anyone hedging bets if the company will go up for auction, and if so, who the interested parties might be?

I could think of a few (EA, Microsoft...) but who knows. Not sure about the Private company deal, however. I guess this would be to prevent this sort of coup, and the shock waves of the Hot Coffee scandal, from destabilizing the company.

Please correct me if I'm wrong here.

The shareholders planning to stage a coup are only 46% of the shareholders, correct? An action, such as taking control would require a majority of the shareholders to agree.. As it stands, 54% of the company has not sided with them.
I don't know a whole lot about business, but couldn't this whole take over pretty much go like so?:
46% - "We demand you fire everyone and give the company to someone better!"
54% - "No."

NO NOT EA if EA bought out Take 2 then GTA will be ruined. It will be bloodness and dumped down to a T rating.

ChrowX
so more people voted for Gore didn't mean he won,votes are just a guideline anyway :P
---------------

But this is not good news MS and EA are bad pubs for the most part they have enough properties to screw up...

Well, the 46 percent shareholders can outvote the remaining 54 if their vote, combined, is larger than the percentage of people against. The 54 percent are probably a combination of investors that, separately, are less than 46 percent. This is why a coup can take place.

Ken Kutaragi: (to SCEA board) "Hey guys, remember when we were talking about exclusive content the other day? Guess what...."

You don't have to be public to be big. Fidelity, Enterprise Rent-a-Car, and SC Johnson are all privately held companies. And depending on how you're organized, your board can still fire you.

That's similar to what happened to Ted Turner, well not really but from his company merging with other companies his share kept getting smaller and smaller until he was pretty much forced out of power with the AOL merger.

Also, who's to say that Rockstar doesn't have a deal in place where they can break away and retain rights to their IPs? Really, outside of Rockstar and 2k games, what does Take-Two have?

@Crash
You don't have to be incompetent, just not doing things the way everyone else would want to do it. In short, if the rest think they can make more money doing it their way instead of yours they will can you wehter you are competent or not.

Of course not everyone is like that.

"That’s why I will never start a public company, I could eventually be forced out of my own company."

Well only if you are incompetent, which in the case of Take-2, they have had mass incompetence from a long time now; financial woes notwithstanding.

Who knows, maybe SCi will buy them or Vivendi (who have problems of their own). It will be an interesting month to be sure.

Then I guess Take-2 is running out of time. End of fiscal year, if I remember correctly, is the end of this month (March).

By stalling a week, they probably are selling off their shares, or arranging "poison pill' plans to prevent a sale or takeover bid.

It won't save upper management or the board, however. That much I know.

@Konrad

They are required by federal business law to hold a shareholder meeting every year. There is not a specific time they have to have it by. They can reschedule all they want as long as it is within the fiscal year of the company.

As for the sell of the company, I don't really care as long as Sony, Microsoft, Nintendo, or EA gets it. These guys are too big for their own good. But more likely, they will sell to another group of private investors who like the new board of directors. That's why I will never start a public company, I could eventually be forced out of my own company.

This seems like a fairly predictable move by the board. They want to buy time to get a proper response to the vote of no confidence put together. And if at all possible, they'd want to see shares changing hands to shift the balance of votes in their favour, or even completely buy out the unsatisfied parties.

I wonder, though. Is there any limit on how many times they can reschedule their shareholder meeting?
 
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