Take-Two shareholders slash stakes

By Scott Hillis

SAN FRANCISCO (Reuters) - The two biggest owners of shares in Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research, Stock Buzz) said on Monday they drastically cut their stakes in the video game publisher, potentially undermining management's stance that a $1.9 billion buyout offer from Electronic Arts is too low.

U.S. mutual fund company Oppenheimer Funds, Take-Two's biggest shareholder, halved its holdings to 8.8 million shares, or 11.5 percent, down from the 23 percent stake it held previously, according to U.S. regulatory filings.

FMR LLC, the parent company for the Fidelity mutual funds that was the second-largest owner of Take-Two shares, also reported that it had slashed its stake to 2.75 percent from 14.7 percent.

"To the extent there was speculation that shareholders would band together and hold out for more money from EA, that's kind of shot down now," said Wedbush Morgan analyst Michael Pachter.

"They are voting on this deal and they are voting with their feet. They know they have no leverage," Pachter said.

The company is seeing other signs of shareholder unrest.

A shareholder lawsuit in a Delaware court accuses Take-Two management of "breaches of fiduciary duty" for refusing to explore EA's offer, arranging a large payout for executives if the company is acquired, and other matters, according to court documents seen on Monday.

Shares in Take-Two fell 2.8 percent to close at $24.85 on Nasdaq. Neither Oppenheimer nor FMR said why they sold their shares, and Take-Two declined to comment on the sales.