Take-Two rejects EA’s $2 billion bid

Take-Two has announced it has rejected EA’s unsolicited $2 billion proposal, indicating the offer “substantially undervalues Take-Two’s robust and enviable stable of game franchises, exceptional creative talent and strong consumer loyalty”.

EA had offered to pay $26 per share, a 64% premium over Take-Two’s closing price on February 15, 2008.

A Take-Two statement also described EA’s proposal as “highly opportunistic” and an attempt “to take advantage” of its upcoming release of Grand Theft Auto IV.

Strauss Zelnick, Executive Chairman of the Board of Take-Two commented: “Electronic Arts’ proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives underway at the Company.”

Zelnick continued: “While the Board believes that entering into discussions with EA at this time is not in the best interests of shareholders, we had offered to enter into a good-faith dialogue with EA to determine if our companies can reach common ground on the appropriate value of Take-Two as a first step to realising a mutually beneficially transaction. However, given the great importance of the Grand Theft Auto IV launch to the value of Take-Two, the Board has determined that the only prudent and responsible course for our Company and its stockholders is to defer these discussions until immediately after Grand Theft Auto IV is released. Therefore, we offered to initiate discussions with EA on April 30th, 2008 (the day after Grand Theft Auto IV is scheduled to release). We believe this offer demonstrated our commitment to pursuing all avenues to maximize stockholder value, while we believe that EA’s refusal to entertain this path is evidence of their desire to acquire Take-Two at a significant discount, whereas we believe this value rightly belongs to our stockholders.”

EA CEO John Riccitiello had earlier indicated that the company’s “all-cash proposal” was a “unique opportunity for Take-Two shareholders to realise immediate value at a substantial premium” and a great benefit to Take-Two’s game designers who would be able to take advantage of “EA’s financial resources, stable, game-focused management team, and strong global publishing capabilities”.