Take-Two urges investors to reject EA bid, mulls sale
NEW YORK (Reuters) - Take-Two Interactive Software Inc (TTWO.O) told shareholders on Wednesday to reject a $2 billion hostile bid from rival video game publisher Electronic Arts Inc (ERTS.O) as too low, but said it had begun to explore a sale or other options.
Take-Two said it was still open to a combination with EA or another company, but not before the April 29 release of its "Grand Theft Auto 4" title, widely expected to be the best- selling video game this year.
EA responded by saying its offer was "full and fair" and reflected the value of its game franchises, employees and improving operations.
"By advising its stockholders to reject the offer, Take- Two's Board is exposing them to further delays which may reduce the value and the certainty of a potential transaction," EA said in a statement.
Take-Two shares were down 1 cent at $25.81 and EA shares fell 1.5 percent to $49.40 in late afternoon trading on the Nasdaq.
Take-Two said its board had begun considering strategic alternatives and preparing materials any potential buyer would need to conduct due diligence. It said it has seen indications of interest from other companies since EA made its $26-per- share offer, but has not held any substantive talks.
"We're starting now to be in a position to have discussions on April 30," Chairman Strauss Zelnick told Reuters in an interview. "We think that's the best way to address not only EA's interest, not only other third-party interest, but that we've deeply considered the option of staying independent."
Zelnick did not rule out reaching an agreement before the "Grand Theft Auto 4" release if there was a major change to EA's position, which he said undervalued the game. He said Take-Two was committed to exploring its options even if EA backed off.
Take-Two also adopted a 180-day shareholders' rights plan, or poison pill, to guard against EA's hostile bid and delayed its annual meeting in New York to April 17 from April 10. EA's offer expires on April 11, although the company can extend it.
EA, the world's largest video game publisher, took its all- cash bid directly to stockholders earlier this month as it faces stepped-up competition from rival Activision Inc
(ATVI.O), which is merging with the video games unit of French conglomerate Vivendi SA (VIV.PA).
Many analysts expect EA's bid to ultimately succeed, but that it may have to raise its offer by several dollars.
"This thing is very much in play and we're seeing public bargaining," said Todd Mitchell, an analyst with Kaufman Bros, adding that EA's ability to raise its offer is limited by its need to ensure a deal boosts fiscal 2010 earnings.
"They could do a bid in the $30 to $32 range that is still accretive. I think that is the absolute top," he said. "If the deal comes apart, Take-Two will go back to the low 20s."
A RARE ASSET Continued...
