CrunchArcade: Take-Two says EA offer is inadequate



Oh burn, EA. Take-Two’s board of directors have advised shareholders that they’re worth way more than the $26/share EA is willing to pony up. The press release is mostly a bunch of legal jargon, but it reveals the obvious that others are willing to compete with EA. There could also be a merger between Take-Two and EA or a third party. A few reasons why the BoD is rejecting EA’s offer includes:

EA’s Offer price is inadequate and substantially undervalues the Company.

The Company’s financial advisors, Bear Stearns (you’re joking, right? -PH) and Lehman Brothers, have each delivered an opinion stating that, as of the date of such opinion, the EA Offer price was inadequate, from a financial point of view, to the stockholders of the Company.

The EA Offer is opportunistic and has been timed to take advantage of the upcoming release of Grand Theft Auto IV, one of the most valuable and durable franchises in the interactive entertainment software industry and the Company’s biggest selling and most profitable franchise.
Oh gosh, the list goes on and on.

The Chairman of the Board, Strauss Zelnick, pretty much summed everything up with this,

“Take-Two’s Board of Directors and senior management team were put in place less than one year ago with one mandate: maximize stockholder value. We have maintained a single-minded focus on that goal ever since and it remains the guiding principle in every decision we make with regard to Take-Two. Our Board, after careful review, has unanimously determined that Electronic Arts’ offer continues to provide insufficient value and remains opportunistically timed to capture the value of the upcoming Grand Theft Auto IV launch at the expense of our stockholders.”

“With one of the strongest portfolios of intellectual property in our business, a superb creative and business team, and a revitalization plan that is beginning to deliver results, Take-Two is uniquely positioned to create stockholder value in an industry that is enjoying the highest growth rates of any entertainment medium. We are effectively working toward a process to review all available options to maximize this value, either as an independent company or in combination with a third party, and are open to beginning informal discussions starting now. Our stockholders’ interests would hardly be served by accepting an offer from EA at the wrong price and the wrong time. As a result, the Board recommends that stockholders not tender any of their shares to EA.”