T2 Tells Shareholders To Reject EA’s Hostile Offer
Hot off the wires…
Take-Two (TTWO) has issued a press release in which it recommends that company shareholders reject a $26 tender offer by would-be acquirer Electronic Arts (ERTS). The EA bid is termed “inadequate in multiple respects and contrary to the best interests of Take-Two’s stockholders.”
The release also claims that T2 will begin a “review of stragetic alternatives” following the April 29th release of Grand Theft Auto IV:
The Company has received indications of interest from third parties with respect to possible business combination transactions [i.e., mergers]… but no substantive discussions have yet occurred… Prior to the release of Grand Theft Auto IV, the Company is willing to enter into confidentiality agreements on customary terms and to engage in preliminary conversations with interested parties, including EA.
Chairman Strauss Zelnick is quoted in the press release:
Take-Two’s Board of Directors and senior management team were put in place less than one year ago with one mandate: maximize stockholder value. We have maintained a single-minded focus on that goal ever since and it remains the guiding principle in every decision we make with regard to Take-Two. Our Board, after careful review, has unanimously determined that Electronic Arts’ offer continues to provide insufficient value and remains opportunistically timed to capture the value of the upcoming Grand Theft Auto IV launch at the expense of our stockholders.
An article in today’s New York Post quotes Goldman Sachs analyst Mark Wienkes:
We believe [EA’s] shares already incorporate a modest bump. We think its rational to expect a higher bid.
Webdush-Morgan analyst Michael Pachter suggested T2 consider peace talks:
If Take-Two approaches EA about how to make this a friendly deal, they have a chance at getting EA to increase its bid.
Meanwhile, Sterne Agee analyst Arvind Bhatia foresees only a small bump in EA’s offer price:
We see EA eventually raising the bid, but only slightly. . . $1 or $2.
March 26th, 2008 at 7:58 am
I hope this take over does not happen. It would be the death of GTA if it does.
March 26th, 2008 at 8:02 am
Cheater87,
I’m out of the loop. Has there even been mention of GTA V? Long ago, I had heard GTA IV was the last of the series.
Nightwng2000
NW2K Software
March 26th, 2008 at 8:06 am
Well San Andreas was also “the last GTA” back then… They’re not going to kill of a series that sells so well on pre orders. And yes I agree, having EA pulling the strings on GTA is not something I want to see happen.
March 26th, 2008 at 8:15 am
GTA3, vice city & san andreas all seem to be classed as GTA3 as far as numbering schemes go. Maybe they’re numbering the game engines rather than the actual GAMES, VC & SA did use an improved version of the GTA3 engine if memory serves whereas GTA4 seems to be a ground up redesign.
Regardless, stockholders would be completely insane to sell stock just BEFORE something that is practically guaranteed to be a massive hit
March 26th, 2008 at 8:15 am
They will be making more GTA games. GTA IV is not the last one. I read in IIRC Game Informer that the DLC is to make the game last longer. They will make sequels.
March 26th, 2008 at 8:16 am
It’ll happen. EA wants it bad enough, and they’re fairly unlikely to take no for an answer. As a purely intellectual exercise, I have some options, and I imagined that they were for Take2 and drilled a couple numbers. I’d make 50 grand. There’s no way I’d reject THAT sale.
People don’t hold stock in a company because they like the product line or the company, they’re not doing it out of the goodness of the hearts, they’re hoping to make some money. The only question is, do they think they can make more money by holding onto it, or by selling to EA?
March 26th, 2008 at 8:35 am
Well its the eve of what is arguably the biggest & most anticipated product the company has ever produced and is exceptionally unlikely to be a financial flop even if the game is a total piece of shit. To use a poker analogy, it’d be like folding when you have 4 kings, not much chance of a loss without something spectacularly unlikely happening.
March 26th, 2008 at 8:53 am
Please god, dont let EA take them over.
March 26th, 2008 at 9:19 am
I’m worried that if EA took over, they would replace the parodied ads with real world ads.
March 26th, 2008 at 9:22 am
@Aliasalpha
Understood. But come at it from a slightly different angle. Imagine if you will, how many of T2’s shareholders, do you suppose, are gamers? Of those people, how many do you suppose, care about GTA4 beyond what the company promises them?
Not having a huge background in the subject, I don’t honestly know what having a solid release title does for a company’s stock price. Although I did hear some rumors that Bioshock did wonderful things for 2K last year. That said, buyout offers almost always drive stock prices through the roof. Since EA announced their intentions to acquire take2, T2 is up 40%; and the actual sale hasn’t even occurred yet. Also, consider, if EA does acquire T2, it’s not like that means they WON’T launch GTA4. Quite the contrary. GTA4’s probably the main reason they want to acquire T2. So consider, if you’re a shareholder, why shouldn’t you get the benefits from both the buyout AND the GTA4 launch?
March 26th, 2008 at 1:10 pm
The reason why GTAIII, VC, SA and the three side games (the GBA game, LCS and VCS) are a part of the same universe. GTAIV is a new universe and of course the engine is different but the main thing is the universe, so GTAV will probably be a long ways off as they might go with a similar scheme as before.
I don’t know anyway who thinks EA getting their hands on T2 is a good thing, well aside from a certain hack and maybe idiots on Wall Street. Hopefully Rockstar has a “out clause” and can retain their properties. 2K games though is probably screwed.
March 26th, 2008 at 1:13 pm
@Sean
The way EA is going, not only would they put in real-world ads, but they’d also likely take out the best cars and weapons, instead requiring you to purchase them as microtransactions.
March 26th, 2008 at 3:12 pm
@ linenoise
The thought of that makes me cringe…
March 26th, 2008 at 3:14 pm
Just say NO to EA!
March 26th, 2008 at 4:11 pm
I hold TTWO stock and am an avid video game player. So take it from someone who knows.
When GTA San Andreas was released, TTWO stock reached the mid $30s. And it was ONLY released on the PS2.
GTA IV is going to be released on both the PS3 and XBox 360… and it’s going to have episodic content released via “xbox live”. I can assure you TTWO stock will easily, once again, reach the mid $30s and will most likely hit the $40s.
EAs $26 a share offer is a joke. Unfortunately, I’m not laughing. I fear most of the share holders are probably going to be duped, which is quite unfortunate.
March 26th, 2008 at 4:19 pm
so if EA succeeds in purchasing T2 (I don’t believe they will), will they then try to obtain Activision?
March 26th, 2008 at 5:25 pm
So EA is willing to pay 1 or 2 more dollars when the stock is being sold at their current bid right now??? and will likely be a lot more after the next GTA launches?
What kind of a dumb stock holder would agree to this deal???
March 26th, 2008 at 6:11 pm
26 bucks? Woop dee doo, when GTA IV releases stocks will make a HUGE jump, they always have when the GTA’s release since GTA 3. I have no love for EA, I can not stand the series and companies they butchered.
C&C 3, I love the game won’t lie but they made the world SHINEY and pretty, the world in C&C Firestorm was desolate and cumbling.
MoH, honestly needs to die, love the series but my god whats the tally at now? 32, 33 MoH? My god let it die.
March 26th, 2008 at 7:05 pm
I don’t know much about stocks and such, but I just hope that Unicron- I mean EA doesn’t get T2 we need more 3rd party game companies, not one big one. That would just be boring.
Maybe I’m biased towards EA.
March 26th, 2008 at 7:18 pm
@StockHolderGamer
OK - I defer to your experience and recant some of my theories. I still believe the sale will go through eventually, but I honestly have no idea what GTA4 would do to the price, or how to compare it to the 40% it hiked when EA tried to acquire them. My assumption that it’s possible to have the best of both worlds is based on the idea that EA can be cornered into paying more pre-GTA4 then they can post.
I’m sticking to my underlying theory though, I still believe the only relevant question is whether or not T2’s stockholders make more money for themselves by holding out, or selling to EA. I have no love for EA, and I’m certainly not crazy about them continuing what amounts to a godzilla like rampage across the industry (especially leaving a swath of closed development houses in their wake). I just believe that what’s best for the industry won’t be the deciding factor. Will be all about $’s.
March 26th, 2008 at 7:41 pm
“What kind of a dumb stock holder would agree to this deal???”
As was mentioned, the kind that doesn’t know squat about the company behind the stock they hold. The kind that sees short-term profit instead of long-term, or even next week.
March 27th, 2008 at 12:40 am
I was watching CNBC earlier today(I own stock in Coca-Cola) and this came up. Naturally, the moron talking about decided to show how little he knows about video games and said it was a good idea since the company was obviously tanking as “nobody plays GTA1 or 2 anymore.”
Which reminds me, anyone know where I can get a 2008 Model T? I’ve heard great things about their earlier models!
March 29th, 2008 at 2:55 am
EA sucks. Ok they have a few good titles, but not like Take Two. If EA takes over Take Two it may be the end of awesome games as we know it