EA extends Take-Two buyout offer
Take-Two Interactive Software Inc., publisher of the popular “Grand Theft Auto” video game series, said it wanted more time to consider a $2-billion buyout by larger rival Electronic Arts Inc. and it wanted more money. On Friday, half its wish came true.
EA extended by nearly a month its tender offer for Take-Two but lowered the price it’s offering for each share of the company to reflect restricted shares granted to Take-Two’s management a day earlier.
The offer, which would have expired at 11:59 p.m. EDT Friday, is now good through May 16. As of Thursday, about 6.4 million shares of Take-Two had been tendered, representing roughly 8% of Take-Two’s outstanding shares.
It’s been nearly two months since Redwood City, Calif.-based EA made public its bid to buy Take-Two, and close to five weeks since it took the offer directly to shareholders.
New York-based Take-Two has been holding out, refusing to enter formal talks with EA or any other suitor until April 30, the day after “Grand Theft Auto IV” goes on sale.
EA said it extended the deadline to comply with a second request from the Federal Trade Commission for information about the proposed acquisition. It’s the second extension; the first came after Take-Two moved back the date of its annual shareholder meeting by a week.
EA wants to buy Take-Two not just for the “Grand Theft Auto” franchise, which has sold more than 65 million copies so far, but also for its sports business and critically acclaimed titles such as “BioShock.”
EA, which has long enjoyed its status as the world’s largest game software publisher, will also face a new rival later this year when French media conglomerate Vivendi combines its games unit with Santa Monica-based Activision Inc., the company behind the successful “Guitar Hero” series. That deal, which will give Vivendi a majority stake in a new company called Activision Blizzard, won European regulatory approval this week.
By adding Take-Two’s 2K Sports line to its own label, EA would have a near monopoly on sports video games, and its size and global marketing prowess mean that it can boost sales of Take-Two’s titles.
But EA doesn’t necessarily need Take-Two. This is evident “in their conviction in their existing offer, that they haven’t raised the price,” said Colin Sebastian, an analyst with Lazard Capital Markets. “But they view it as a good opportunity. If EA thought this was a very necessary component in their growth plan, they would have been more aggressive.”
By buying Take-Two, EA is trying to bulk up with more games to sell for the newest generation of gaming consoles from Nintendo, Microsoft and Sony. The video game industry, which hit $18 billion in U.S. retail sales last year according to the NPD Group, has shrugged off the economic slump and is growing so fast that by some measures it’s outpacing the music industry.
EA has repeatedly said that timing was key for its offer -- first made public Feb. 24 -- because it wants to put its marketing muscle behind “Grand Theft Auto IV,” which goes on sale April 29. But Take-Two has called the timing “opportunistic” and has refused to sit down with EA until the day after “GTA IV” goes on sale.
Owen Mahoney, EA’s senior vice president of corporate development, said any further delays, whether caused by regulatory requirements or Take-Two’s management, could affect the “value and certainty of the offer.”
EA’s bid for Take-Two is still valued at about $2 billion. The company said it adjusted the per-share price to $25.74 from $26 to reflect additional shares of restricted stock granted to Take-Two’s management.
Shares of Take-Two climbed 13 cents to $25.98. EA’s shares rose 55 cents to $52.01.
