EA in Hostile Bid to Acquire Take Two

February 24, 2008 -
Entertainment software giant Electronic Arts announced today that it is seeking to merge with GTA publisher Take Two Interactive in what would be a two billion dollar deal. 

But Take Two is playing hard-to-get.

An EA press release claims that it offered $26 per share for Take Two stock in a February 19th letter from EA CEO John Riccitiello (right) to T2 boss Strauss Zelnick (left). After Take Two management rejected EA's offer, Riccitiello decided to appeal directly to T2 shareholders. The $26 offering price represents a better than 60% premium over recent T2 share prices.

Said Riccitiello:
Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Two's game designers would also benefit from EA's financial resources, stable, game-focused management team, and strong global publishing capabilities.

But EA's cash-laden offer also came with a warning:
There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today.

For the full text of EA's letter to Take Two, hit the jump...

Dear Strauss:

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.'s ("EA's") $25 per share cash offer to acquire Take-Two Interactive Software, Inc. ("Take-Two") and declined to engage in the friendly negotiations we proposed.

We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA's offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Our revised all-cash offer represents a 64% premium over Take-Two's most recent closing price and a 63% premium over Take-Two's 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.

We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Two's creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Two's talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best - create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Two's studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

We believe that Take-Two's shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

We also believe that any delay in this proposed transaction works against the interest of Take-Two's shareholders, because:

-- There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA's strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year's holiday selling season.

-- We believe Take-Two's current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

-- With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.

We also believe the transaction we are proposing will create value for EA's shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Two's and EA's corporate and publishing infrastructures and by optimally supporting Take-Two's creative teams and intellectual properties in EA's decentralized label structure.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two's shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two's shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22.


John Riccitiello
Chief Executive Officer



Interesting that they would go this route.

I'm sure that many shareholders will take the offer to realize fast financial gains.

first blizzard and now this, damn this sucks. the only game companys left that can make a good product will be valve and bethesda.

USELESS BLOODY WANKERS!! Oh, T2 didn't say yes.


There will be loading screens with messages like "have you tried soliciting a hooker and then after you do it together, running her over with your car to get your money back?"

EA just fear the wrath of the new biggest publisher....


@Creamy Goodness

Blizzard got a really good deal. And got to remain independent as well. This is nothing like the Blizzard deal. EA is going to rip the company away from them.

Expect this to take at least 2 years, involve the courts, and eventually see alot of people get fired.

Take-Two is in for the fight of its life. Jack Thompson is nothing like this, but he must be laughing like crazy right now.

GTA 5 won't completely suck, but EA would just make a sucky E-rated version for the Wii.

No, EA. Not after what you did to Westwood...

This can only end poorly for all who are involved.

NOOOOOO now GTA will be E rated and suck.

Is EA becoming increasingly imperialist?

GTA 5 for 2009 confirmed.

No! No! Bad EA! Bad!

No, it won't be GTA 5. It will be GTA 2008, 2009, 2010 etc. with updated gang rosters. Oh well, GTA was getting old anyway.

[...] Original post by GamePolitics Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. [...]

EA never were so desperate before to compete Activision Blizzard, doesn't it?

Everyone ready for another series of wash, rince, repeat type games from a once well established developer?

On one hand, I cringe on the fact that EA wants to expand AGAIN.

On the other hand, I cringe on the fact that EA wants to expand AGAIN.

Didn't someone from EA just say that they own too many IPs to be working on everything they want. They really don't need any more, especially not just to be able to slap their EA stamp on GTA IV.

Judging by how they stood up for Mass Effect, maybe EA would be willing to do the same for Take-Two's controversial titles.

Andrew Eisen

EA's trying to take over the world...

On the other hand, I would like to see JT go after EA. That scenario is probably more entertaining than the games resulting from a merger.

Great, now GTA will lose it's funny pun advertisements for real world BS.


That and they'll get exclusive rights to make 'sandbox in the city' games and no one else'll be able to. :P

Huh. Considering recent comments by Riccitiello, I have to admit that I didn't see this coming. Maybe his intent is to run the take 2 studios as "city states" and basically leave them alone... Yeah, and maybe I'm just optimistic on a sunday morning.

NNNNNNOOOOOOOOOOOOOOO dont do it T2 its all a lie

Tch. This TERRIBLE for the industry. Make no mistake about that. Losing Bioware to EA was bad enough, but Take 2? EA is totally overstepping the bounds of professionalism in the industry here. The worst part is how glaringly obvious the threat they made is regarding stock.

Anyway, at this rate, I wouldn't be suprised if I'll ever hear that EA ever bids to acquire, say, Nintendo.

This can't be good.

Fuck EA. First they buy Bioware, and now this. Fuck them in their ass.

First off, they're worth more than 2 billion

Second, DON"T DO IT!!!!!!

I'm guessing tomorrows headline will be, "EA attempts to purchase moon, UN resists."

This massive industry consolidation is only good for shareholders and is not good for the creative side of the industry, not gamers themselves. EA's titles are corporate and soulless and I can't imagine what they would do to such Take-Two staples as GTA. Like Midnight Club? We won't see another one if this happens. Like Mafia? Expect that to disappear in light of new crappy Godfather games. I hope that Take-Two shareholders will decide to reject the bid in the hopes that they can command a higher price after GTA4 ships. Make no mistake, that's why EA is bidding now. They say the company won't be worth what they're offering later but they know that after GTA4 ships, $2 billion will be nothing to Take-Two.

No two ways about it now, EA is trying to monopolize,and when that happens, companies win, consumers lose.

I predict GTA V: John Madden in 2010, where you play a down-and-out ex-football announcer trying to build a coke and prostitution empire.

EA: We are legion. Join your voice with ours and sing victory everlasting.

Lmao i love how EA words the letter. It make is sound threating. But i would say hold and hold and hold Ea want take two badly enough they will raise there offer.

[...] GamePolitics.com is reporting on an acquisition proposal for Take Two that has now become public. In the proposal, EA is offering $26 per share for Take Two stock, a 60% premium over recent share prices. An EA press release claims that it offered $26 per share for Take Two stock in a February 19th letter from EA CEO John Riccitiello (right) to T2 boss Strauss Zelnick (left). After Take Two management rejected EA’s offer, Riccitiello decided to appeal directly to T2 shareholders. The $26 offering price represents a better than 60% premium over recent T2 share prices. [...]

@ Flaps

In a few more months it won't matter. JT will have been disbarred by then.

@ Tronik
More like, "We are EA. We wish to improve ourselves. Your biolgical and technological distinctiveness will be added to our own. Your company will adapt to service ours. Resistance is futile."

@Black Manta,

No its "A thousand nations of the EA empire, descend upon thee! Our money offers will blot out the sun."

DO. NOT. WANT. if it does happen i hope rockstar is smart enough to mutiny.

EA is there anything you won't buy??

Hasn't EA raped enough franchises already?

In the unholy words of Darth Vader...


I can see the next headline...

"EA buys E-bay. ON E-BAY."

EA's desperate because GTA is so popular and they want to milk it for all it's worth, just like they do with Madden since it's the only NFL game you'll be seeing until 2013, then 2018, etc.

Oh, god... will those imperialists at EA ever stop? Now, while I love the Sims and SimCity as much as the next guy (w00t, Will Wright... looking forward to Spore), I think it's pretty obvious that a lot of franchises under EA's wing get... how you say... raped.

Fight the power, Take Two! You don't need them to harass you! Viva la R*!

@ stromlancer

"I can see the next headline…

“EA buys E-bay. ON E-BAY.” "


great... if take two is assimilated, we would hav politicians flinging shit at us AND shitty gta expansion packs.

These greedy fucks only want Take-Two for the profits from GTA IV. The videogame industry will die if EA is allowed to buy out every good developer.

PHHSSSSHH, I lost faith humanity a LONG time ago! Compared to when LucasArts cancelled the Sam & Max sequel weeks before its release in early 2004, this is NOTHING!
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Andrew EisenAnd I'm off too. Play nice, y'all!08/01/2015 - 11:33am
Andrew EisenIn short, discussions of ethics in journalism? Totally fine. Said indie dev's sex life? Not okay.08/01/2015 - 11:31am
james_fudgeTry talking when you have hundreds of people tweeting at you at the same time :)08/01/2015 - 11:30am
Andrew EisenAnd yet, when 30-seconds of research showed that there was no relevance to said indie dev's sex life, many people kept talking about. Hell, still do to this day. I had a guy on Twitter pester me about this nonsense for an entire day last weekend.08/01/2015 - 11:30am
james_fudgeWhatever dude, you're here posting. No one's stopping you.08/01/2015 - 11:30am
Goth_SkunkBe advised: In approximately 30 minutes I'm heading out of town for an obligatory family reunion. This is being stated so that none can interpret my upcoming 24 hour hiatus as a tail-tucking turn from discussion.08/01/2015 - 11:28am
Goth_SkunkEven now, IronPatriot, MechaCrash, and Craig R. continue to attempt to shout me down and dehumanize me.08/01/2015 - 11:25am
Goth_SkunkWhat transpired afterwards was a concerted effort to shout down and dehumanize those trying to bring these matters out into the open. I remain utterly convinced of this to this day.08/01/2015 - 11:24am
Goth_SkunkAnd yet the sex life of this indie developer tied right into the matter of journalistic ethics, as investigations uncovered a great number of breaches of ethical conduct, both related & not. That scandal is the orifice from which the balloon is inflated.08/01/2015 - 11:20am
MechaCrashI am reminded of the saying about playing chess with a pigeon.08/01/2015 - 11:13am
Andrew EisenThis is supported by, well, what actually happened, but also the text of the actual leaks. That was Tito's question and what he and a few (four total, I think) were discussing.08/01/2015 - 11:11am
Andrew EisenNo, it's not. What was generally prohibited was not discussion of journalistic ethics or other GamerGate topics, but threads that were, for example, discussing the sex life of an indie developer. THOSE are what were locked and removed.08/01/2015 - 11:10am
Goth_SkunkI don't believe you. Not for a second. Every major site with the exception of the Escapist prohibited discussion of GamerGate in its early stages. That is a fact.08/01/2015 - 11:04am
Andrew EisenNo, that's a fact. Don't believe me, read 'em yourself. No one was trying to censor discussion of GamerGate.08/01/2015 - 11:02am
Goth_Skunk@Andrew: That's your opinion.08/01/2015 - 10:57am
Goth_Skunkfuture? I'd compensate you for your time, of course.08/01/2015 - 10:57am
Goth_Skunk@IronPatriot: Congratulations on a sweeping statement to remove the agency of people supporting GamerGate for their own individual reasons. Since you're so good at painting in such broad strokes, are you free to paint my apartment sometime in the near08/01/2015 - 10:57am
Andrew EisenWhich, as you can tell by actually reading the snippets that were leaked, is a shamefully disingenuous telling of what was actually said.08/01/2015 - 10:56am
Goth_SkunkAdditionally, to quote William Usher, "[s]ome of the members on that list actively used their platform to support and propagate a wide-sweeping media narrative based on lies and factual inaccuracies."08/01/2015 - 10:54am
Goth_Skunkthe forums of The Escapist. Thankfully, they were both unsuccessful.08/01/2015 - 10:53am

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