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— Deals —
The news comes weeks after EA on Sept. 14 abandoned takeover plans and indicated it did not need the target or its coveted "Grand Theft Auto" game franchise. Just weeks before, the companies had signed a confidentiality agreement, EA disclosed Aug. 25, just days after the Federal Trade Commission cleared the publishers to merge without requiring any divestitures. At that point, they just needed a deal. EA decided to let its last offer expire, it said in a statement Aug. 18, but the two remained talks. The offer expiration date had been extended for the fifth time. Meanwhile, questions remained. Would EA would rework its offer? And the $19 billion Activision Inc.-Vivendi Games Inc. deal spurred speculation it could make a play for Take-Two.
Kicking off June, EA looked closer to meeting the FTC's review for the deal, days after announcing plans to move ahead with another deal: Hand-On Mobile Korea. Take-Two reiterated June 5 it's reviewing its options and there are interested parties, but many onlookers expect EA will come out on top though a price bump is likely, Shabelman noted. On the regulatory front, he wrote:
Take-Two publicly refused to enter merger talks with EA before the
release of its "Grand Theft Auto IV," a video game promising to deliver
blockbuster sales. The game debuted
April 29 to long lines and positive reviews. But, as The Deal's David
Shabelman noted: "Despite the hubbub surrounding the release, analysts
said EA had already factored in the projected banner sales from the
game into its offer for Take-Two." EA extended the tender offer
deadline, which was set to expire April 18, to May 16, only to extend it again, to June 16, and again to July 18. (And then once more in August.) The first extension came after Take-Two shareholders approved an amendment to the company's incentive plan, which allowed for the issuance of $1.5 million shares of restricted stock to its management firm, ZelnickMedia Corp. Take-Two advised its shareholders March 26 to reject EA's $2 billion offer (the would-be buyer stood firm on the offer two days later). As The Deal's Donna Block noted, Take-Two called EA's hostile offer "inadequate," "opportunistic" and contrary to shareholder interests. And in an attempt to protect itself, Take-Two moved its upcoming annual shareholder meeting to April 17 from April 10 and amended its bylaws to give shareholders more time to nominate board members. The move follows Electronic Arts strategy to go hostile with its takeover proposal for Take-Two. The company on March 13 launched a $26 per share tender offer for the "Grand Theft Auto" publisher nearly three weeks after publicly disclosing its bid had been rejected. Meanwhile, much ensued over the first few months of 2008:
The Feb. 24 rejection was made for the second bid EA had put forth for the target, having raised to $26 per share its $25 per share proposal from Feb. 15, which it had rejected. As Dealscape's George White pointed out, the board's rebuffing of the offer as undervaluing the company is sort of ironic:
THE LAST BATTLE On March 29, 2007, shareholders and management vying for control of New York video game developer Take-Two faced off to determine the company's future. For most of the then-sitting board and now-ousted CEO Paul Eibeler, it was the end of the game. Days later, the company's chief financial officer, Karl Winters, resigned. WINNERS AND LOSERS Going into the late-March 2007 meeting, things didn't look good for management as poor financial results, an accounting scandal and shareholder suits plagued the gamer. The shareholder group comprises asset management firm OppenheimerFunds Inc. of New York, which alone holds a 24.5% stake in the Take-Two, as well as SAC Capital Management, Tudor Investment Corp., D.E. Shaw Valence Portfolios LLC and ZelnickMedia Corp. Displaying shareholder activism at its finest, the group, which holds 46% of the company, unleashed their plan for overhaul earlier in March.
In another set of blows to management working up to the meeting, proxy advisories rallied behind shareholders.
Earlier in March, UniCredit Group said in a regulatory filing it had raised its stake in the game publisher from 7.3% to 10.3%. The same day, the Oppenheimer-led group's intentions were made public.
TROUBLE STILL Take-Two, which is known for Grand Theft Auto, and not much else, has taken strategic missteps as well and could need more than a board overhaul to fix its problems, one analyst told Kate Gibson. Trying to compete for share in professional sports video games was a mistake, he said, where rival Electronic Arts Inc. enjoys 75% of market share. Because of the stock options trouble, several years of Take-Two earnings need to be restated. For the first quarter ended Jan. 31, 2007, Take-Two said it lost $21.5 million on $277.3 million in revenue. A year earlier, the company said it lost $29.1 million on sales of $265 million.
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It's official. More than two weeks after hostile bidder Electronic Arts Inc. walked away from its $2 billion bid for Take-Two Interactive Software Inc., the target has wrapped up a strategic review of alternatives and will remain independent, 
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