Electronic Arts offers $2 billion for gaming rival
Last Updated: Monday, February 25, 2008 | 2:31 PM ET
The Associated Press
Electronic Arts Inc. says it is pushing ahead with a bid to take over upstart gaming rival Take-Two Interactive Software Inc., despite rebuffs from the smaller company.
EA said in a statement Sunday it is making an all-cash bid of $26 a share, or about $2 billion US, for New York City-based Take-Two, known for its Grand Theft Auto franchise.
EA, the world's largest independent video game publisher, said it was releasing details of the proposal to gain the attention of Take-Two shareholders after Take-Two's board turned down its second bid in two weeks.
The offer represents a 64-per-cent premium over Take-Two's closing stock price of $15.83 on Feb. 15, the last trading day before Redwood City-based EA made its proposal. Take-Two shares closed at $17.36 Friday.
"There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today," EA Chief Executive John Riccitiello wrote in a letter to Take-Two released Sunday.
Offer labelled 'opportunistic'
Riccitiello added Take-Two's quick acceptance of the offer would mean EA could put its marketing muscle behind the eagerly awaited release of Grand Theft Auto IV, set for April 29.
In its response, Take-Two called the EA offer a "highly opportunistic" attempt to take advantage of the game's upcoming release.
"Electronic Arts' proposal provides insufficient value to our shareholders and comes at absolutely the wrong time," Take-Two chairman Strauss Zelnick said in a statement.
Zelnick said EA rejected Take-Two's offer to resume discussions of the takeover bid the day after Grand Theft Auto IV hit store shelves.
EA said it offered $26 a share Tuesday after Take-Two rejected a $25-a-share bid earlier this month.
Trouble with leadership, violent content
The offer comes as Take-Two works to regroup following a rocky year. Shareholders threw out most of the company's top leadership last spring for poor results, as well as accounting troubles and controversy surrounding violent and sexual content in the company's games.
Several former Take-Two executives, including chairman and CEO Ryan Brant, pleaded guilty in 2007 to falsifying business records in connection with a probe into backdated stock options.
Also last year, the British Board of Film Classification refused to certify Manhunt 2, a gory game that received an adults-only rating from the Entertainment Software Rating Board in the United States.
EA, which publishes the Madden NFL and FIFA Soccer series among its popular sports franchises, has been working recently to beef up its product lineup with a wider variety of titles.
In January, the company closed its acquisitions of BioWare Corp. and Pandemic Studios, known for their action, adventure and role-playing games, in an $860-million deal, the largest in EA's history.
Earlier this month, the company announced that Spore, the highly anticipated game from Sims creator Will Wright, will go on sale the weekend of Sept. 7 amid likely stiffer competition in the $18-billion video game market.
In a deal expected to close in the first half of this year, French media and telecom giant Vivendi SA plans to combine EA's chief rival, Activision Inc., with its own games unit to form Activision Blizzard. The merged company will own the wildly popular online game World of Warcraft and the Guitar Hero franchise.
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