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Apr-17-2008FTC wants more time to examine EA $2B purchase of Take-Two Software(topic overview)
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Electronic Arts Inc.' s hostile takeover battle for Take-Two Interactive Software Inc. is likely only in its first round, though events this week could signal whether Take-Two's shareholders are leaning toward the rival game maker's $2 billion offer. At an annual meeting of shareholders Thursday evening, Take-Two -- publisher of the blockbuster Grand Theft Auto game series -- is expected to tally a vote on a proposal to grant ZelnickMedia Corp., the consulting firm that manages Take-Two, 1.5 million shares of restricted stock for its services. If approved, EA has said that proposal -- which has been controversial for its size. [1] REDWOOD CITY, Calif. (AP) - Electronic Arts Inc. (NASDAQ:ERTS) said Thursday that it received a second request from the Federal Trade Commission in relation to its proposed $2 billion purchase of Take-Two Interactive Software Inc. (NASDAQ:TTWO) EA, which is the world's largest video game publisher, said that while it believes the proposed acquisition would not be anticompetitive, the FTC hasn't come to a conclusion and said it needs more information and time to complete its review. Take-Two, best known for the popular 'Grand Theft Auto' franchise, has repeatedly rejected a $2 billion buyout offer from EA, its larger rival.[2] Electronic Arts Inc. said Thursday it received a second request for information from the U.S. Federal Trade Commission regarding its proposed $26-per-share acquisition of Take-Two Interactive Software Inc. The Redwood City-based game developer (NASDAQ: ERTS) said that "while EA believes that its proposed transaction with Take-Two would not be anti-competitive, the FTC has not yet reached any conclusions regarding the proposed acquisition and has indicated that it needs further information and additional time to conduct its review."[3]
REDWOOD CITY, Calif.--( BUSINESS WIRE )--Electronic Arts Inc. ( " EA " ) (NASDAQ:ERTS) today announced that it received a second request for information from the U.S. Federal Trade Commission ( " FTC " ) regarding its proposed acquisition of Take-Two Interactive Software, Inc. ( " Take-Two " ) (NASDAQ:TTWO). While EA believes that its proposed transaction with Take-Two would not be anti-competitive, the FTC has not yet reached any conclusions regarding the proposed acquisition and has indicated that it needs further information and additional time to conduct its review. This press release is neither an offer to purchase nor a solicitation of an offer to sell securities of Take-Two.[4]
NEW YORK, Apr. 17, 2008 (Thomson Financial delivered by Newstex) -- Electronic Arts Inc. (NASDAQ:ERTS) Thursday said it received a second information request from the Federal Trade Commission about its proposed acquisition of Take-Two Interactive Software. (NASDAQ:TTWO) The FTC needs additional time to review the proposal and it hasn't reached any conclusions yet, Electronic Arts said.[5]
EA Receives Second Anti-Competition Inquiry From FTC Officials from Electronic Arts have announced that the company has received a second request for information from the U.S. Federal Trade Commission (FTC) over its ongoing attempts to acquire rival publisher Take-Two Interactive. In a statement, Electronic Arts indicated that the company does not believe that its proposed 'transaction' with Take-Two Interactive would be anti-competitive. The FTC, though, has not yet reached any conclusions regarding the matter, and has indicated that it needs further information and additional time to conduct its review. Electronic Arts' own deadline for their now hostile takeover of Take-Two is shortly to run out, after the company extended the milestone from April 11th to 11.59pm EDT on Friday April 18th.[6]
Electronic Arts (ERTS) has received a second FTC request for information about its plans to acquire Take-Two Interactive (TTWO). You can read up on the details in this SEC filing and accompanying press release, but there's really no need. Today, when Take-Two shareholders get to vote on a poison pill proposal at their annual shareholders meetings; and.[7]
The publisher's annual shareholder meeting kicks off after the markets close tomorrow, and Electronic Arts' $26 per share offer to acquire the company is set to expire just before midnight on Friday. With more than enough on its plate already, at least the publisher no longer has to worry about a shareholder revolt like the one that took place at last year's annual meeting.[8] The Redwood City, California-based Electronic Arts, or EA, has launched a tender offer to acquire Take-Two for $26 per share in cash after Take-Two had earlier rejected EA's unsolicited as well as sweetened offer.[9] While the presumed success of GTA will help Take Two in negotiating a better deal with EA, which has made a tender offer to acquire the company for $26, or $1.9 billion, "at the end of the day we continue to believe that Electronic Arts will be able to buy Take-Two in the $26-$28 range," the analyst writes.[10]
If the shareholders swallow the poison pill, they'll obviously be signalling that they're less likely to take EA's $26 a share offer -- but that doesn't mean they wouldn't look at another deal. It's the GTAIV performance that really matters. Take-Two management has repeatedly argued that their company is worth much more than Wall Street or EA realize, and that everyone will come to their senses once the game goes on sale April 29th. As we've said before, we don't think much of this theory : GTAIV has been a blockbuster-in-waiting since GTAIII came out, and it's going to be very, very hard for the game to beat expectations. We had originally incorrectly reported that EA had extended the deadline for its tender offer, which is set to expire at the end of Friday.[7] On March 13, EA began a $26 per share all-cash tender offer, which expires on Friday -- the day after Take-Two's annual shareholder meeting.[2]
The offer to purchase or solicitation of offers to sell is being made pursuant to a Tender Offer Statement on Schedule TO (including the Offer to Purchase, Letter of Transmittal and other related offer documents) filed by EA and EA08 Acquisition Corp. with the Securities and Exchange Commission, or SEC, on March 13, 2008. Before making any decision with respect to the offer, Take-Two stockholders are advised to read these documents, as they may be amended or supplemented from time to time, and any other documents relating to the tender offer that are filed with the SEC carefully and in their entirety because they contain important information, including the terms and conditions of the offer. These documents may be obtained at no charge by directing a request by mail to Georgeson, Inc., 199 Water Street, 26 th Floor, New York, NY 10038, or by calling toll-free at (800)213-0473, and may also be obtained at no charge at the website maintained by the SEC at http://www.sec.gov. This release does not constitute a solicitation of proxies in connection with any matter to be considered at Take-Two ' s 2008 annual meeting of stockholders. Neither EA nor its subsidiary making the tender offer is soliciting, or intends to solicit, proxies in respect of any matter to be considered at Take-Two ' s 2008 annual meeting.[4] A poison pill is a strategy used by companies to discourage a hostile takeover by another company. The amendments to the tender offer include a condition added by EA to its offer, requiring either that Take-Two's board of directors redeem the preferred stock purchases rights issued as a result of Take-Two's adoption on March 24, 2008 of the stockholders rights plan, or that EA be satisfied that such rights have been invalidated or are otherwise inapplicable to its acquisition of Take-Two.[9]
If GTA 4 tanks, then I think the shareholders are going to have a change of heart with the EA acquisition. Anyone want to bet that the frantically desperate EA will extend the deadline (again) if Take-Two tells EA to take a hike again? I think this whole botched hostile takeover attempt is going to last right up until April 29 with EA raising it's offering price per share and showing everyone how afraid and terrified it really is of Blizzard/Activision now being the largest game publisher in the world. It stinks of cross-marketing.[8] Opinion: One Love, One Format? Though the fabled 'one-console future' might be great for consumers, the industry, especially mid-level developers, could suffer serious repercussions - not the least of which are higher stakes, bigger risks, and lost jobs. Game Developer's Brandon Sheffield investigates in this opinion piece. Analyst: EA Will Have To Raise Bid To Buy Take-Two Analyst Mike Hickey of Janco Partners has predicted that Electronic Arts lacks sufficient shareholder support to force through its $26-per-share bid for publisher Take-Two, suggesting a $30 bid may be necessary - and also noting that he believes GTA IV's launch will dampen the Iron Man movie's theatrical release.[6] Ever since Electronic Arts disclosed its bid for Take-Two Interactive, Take-Two's strategy has pretty much revolved around one hope: That when the company releases its Grand Theft Auto IV game at the end of this month, sales will be so huge that the market will bid up Take-Two shares. This has never made sense to us: Everyone knows that GTA IV is going to be the biggest game of the year.[11]
The publisher has been under pressure to sell to Electronic Arts since February, when EA went public with an offer to purchase all outstanding Take-Two shares at what was then a 64 percent premium.[8] With the level of stockholder support for Electronic Arts' offer still unclear, the situation may be resolved to some degree following Take-Two's annual meeting today in New York. Electronic Arts, though, has already indicated that it could further extend its deadline if deemed necessary.[6] The deadline was moved following Take-Two's alteration of the date of the company's annual meeting of stockholders and the establishment of a Stockholders Rights Agreement ' an act Electronic Arts described as a 'poison pill'.[6]
NEW YORK -- Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced that stockholders of Take-Two did not submit any proposals for consideration at the Company's Annual Meeting of Stockholders, which will be held on Thursday, April 17, 2008 at 6:30 p.m. Eastern Time.[12] NEW YORK (Associated Press) - Take-Two Interactive Software Inc., which publishes and distributes "Grand Theft Auto" and other popular video games, said Wednesday that it did not receive any shareholder proposals for consideration at its annual meeting.[13]
Headquartered in New York City, Take-Two Interactive Software, Inc. is a global developer, marketer, distributor and publisher of interactive entertainment software games for the PC, PLAYSTATION(R)3 and PlayStation(R)2 computer entertainment systems, PSP(R) (PlayStation(R)Portable) system, Xbox 360(R) and Xbox(R) video game and entertainment systems from Microsoft, Wii(TM), Nintendo GameCube(TM), Nintendo DS(TM) and Game Boy(R) Advance. The Company publishes and develops products through its wholly owned labels Rockstar Games, 2K Games, 2K Sports and 2K Play, and distributes software, hardware and accessories in North America through its Jack of All Games subsidiary.[12]
The New York-based Take-Two Interactive Software engages in the development, publication, and distribution of interactive software games designed for personal computers, video game consoles, and handheld platforms worldwide.[9]
Founded in 1982, the company develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, cellular handsets and the Internet. Electronic Arts markets its products under four brand names: EA SPORTS(TM), EA(TM), EA SPORTS BIG(TM) and POGO(TM).[4] Electronic Arts Inc. (EA), headquartered in Redwood City, California, is the world's leading interactive entertainment software company.[4]
In connection with the tender offer commenced by Electronic Arts Inc., the Company has filed with the Securities Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9.[12] The Company's stockholders should read carefully the Solicitation/Recommendation Statement on Schedule 14D-9 (including any amendments or supplements thereto) prior to making any decisions with respect to Electronic Arts' tender offer because it contains important information.[12]
EA's $26 per share cash tender offer for the company expires on Friday.[13] EA basically set the value of T2 by offering the $26 per share price. Before that they were down around $15 and some change. Sooooo, the true market value of the company pre-GTA is somewhere down around $15 per share, and it is trading at an inflated $25 per share because they have a potential $26 per share buyout on the table.[8]
Read through the article histories and comprehend what T2 has said and done. They turned down the EA bid (which was WAY overpriced at the time and would have been great for shareholders) because they said it was undervalued. It had nothing to do with making quality games, or not being part of EA, or caring about gamers. they just wanted MORE MONEY. Next they go ahead and put in a bunch of provisions and bonuses for themselves (the executives) in case they were fired after a buyout. That seems likely since they have done a terrible job managing a money-bleeding T2 over the years. Would you like to know why execs put those provisions in? Because they think it's likely shareholders will approve the buyout. The EA offer way more than fair, and they clearly took the value of the GTA franchise into account when they offered a 64% premium over the current share price as part of their buyout bid.[8] CFoust91 I don't think there is any reason that T2 would sell out, we all know GTA IV is going to be huge and is expected to sell $400 million in the first week alone. That is obviously going to jump the shares above $26 and even more so as more copies will be sold during the month, and year.[8] Delaying the game 2 weeks before it is released would really suck, EA would probably release the game later in the year towards Christmas, the only thing is that unlike most games I don't think GTA IV would really sell a whole lot better, it is destined to sell out immediately regardless.[8] I'm not going to get too excited, I don't wanna jinx it. Btw, I think EA just wanted the money that GTA IV would bring, thats why they were gonna buy em out. It will be like playing games back in the late 80's early 90's and that sucks.[8]
Maybe what T2 needs to do is let Rockstar go out as an independent developer? Then EA wouldn't be able to bring in Rockstar with a purchase of T2. Anyway, gamers will be on the edge of their seats these next couple days. CFoust91 If the deadline is this Friday and EA does buy T2, could that possibly delay GTA IV? It seems unlikely but I'm not sure.[8] Then let's continue to hope that EA doesn't tear apart the teams at the Rockstar studios that have continued to provide great games over the years. If T2 decides to hang in there, I hope that GTA IV is a big enough seller to help them get back on their feet.[8] If GTA IV gets delayed over the greed of EA then I would have to freak. I'm sure they would use the extra months to add bugs and problems to the game.[8]
I don't want to be a downer, but I believe Take 2's shareholders WILL accept EA's proposal and that GTA IV will be delayed until the Xmas period and that EA can do a hell of a lot more with it than Take 2 can/have.[11]
Recent projections suggest that GTAIV will generate sales upwards of 400 million in the first week alone and the game is tracking nearly as well as HALO 3. Given the fact that GTAIV is multiplatform, odds are that it will outsell Halo 3 and potentially anything else this year given the strength of its franchise recognition coupled with the potential critical groundswell in its favor. Take-Two stock can only go up after this game hits, yet EA seems hell-bent on trying to push the acquisition through before the release in a feeble attempt to get the stock at a lower price. I can't imagine a single shareholder being dense enough to want this deal; GTAIV is a golden ticket and everybody knows it.[6] New York-based Take-Two (NASDAQ: TTWO) continued to fight EA's takeover attempt during a meeting the night before. Shareholders are considering a proposed amendment that would issue additional shares of stock to its management firm, thus making the deal more expensive.[3] Take-Two (TTWO) got a reprieve today, but it doesn't have anything to do with EA (ERTS). A judge threw out parts of a 2006 lawsuit brought by shareholders who said that the company misled them about the sexual content of Grand Theft Auto: San Andreas. That would be the infamous "hot coffee" mod, inserted by a mischevious developer: As we recall, if you did x, y, z, you got to see simulated cybersex. Shareholders argued that the scandal beat up TTWO shares and that somehow they should get paid because of it, but U.S. District Court judge correctly declared that theory to be B.S. She did, however, allow the shareholders to move forward on the other part of the lawsuit, connected to an options backdating scandal engineered by TTWO's previous managers. Somehow, we don't think that the current management is celebrating this development too much -- they have other things on their minds.[14]
Take-Two -- which publishes the popular "Grand Theft Auto" franchise -- urged shareholders earlier to reject EA's offer but said it would be open to discussion after the fourth version of the game is released.[3]
Publisher says it has received no shareholder proposals in advance of looming shareholder meeting and expiration of EA acquisition offer.[8]
EA needs to stop trying to take over the industry and focus on making good games themselves. EA were just being cheeky sly manipulative effers. if they'd left their offer till after GTA they probably wouldn't have become so frowned upon. but because everything was so blatantly about profit they are totally the bad guys in all this. Look it up if you'd like, it's the truth.[8] They even managed to put more mindless advertisement in a game like Nascar that is full of advertisement. but EA can't let go of one part of the screen with no logo on it from Dodge or any other company. They bought out the Burnout Series and put their dumb ass advertisement all over the open city. As far as I'm concerned they get their hand on GTA, I'll be happy there is a Saint Row.[8] All EA wants to is to share in something that isnt theirs. They are a greedy company that wants everything for themselves. if they would have left the buy out till a while after GTA came out, i dont think there would have been such an up roar in the whole take over. i dont think T2 would have went down any easier but it would have made the situation a lot better for both companys at least.[8] CFoust91 As long as future GTA games are not compromised, and influenced in any way by EA then it doesn't matter unless your a fan of other T2 games like 2K sports. North at all, and as long as they don't it really doesn't matter.[8]
Because with the release off GTA 4 soon (woot, I have a pre-order in) $2 billion is lower than what T2 is worth (and will be worth), so hold off T2, you don't have to give in to EA's evil ways.[8] I just want to know what the possibility of another suck ass delay. I dont want them to buy over T2. I wouldnt really care if EA bought T2 just as long as they dont hold back GTA 4 any longer.[8]
Benjamin Schachter of UBS agrees. He predicts that the game may sell 6 million units in the U.S. this year, and that it won't help: "While the assumed success of GTA helps TTWO's negotiating position, at the end of the day, we continue to believe that ERTS will be able to buy TTWO in the $26-$28 range." [11] If GTA IV is as good as expected, Schachter estimates that it could sell six million-plus units in the U.S. in 2008, which would amount to $360 million in retail sales, and seven million to eight million units in the U.S. if the reviews are stellar, or $420 million to $480 million in retail dollars.[10]
I doubt that they will delay GTA IV, I don`t think Rockstar would let them do it. What don't you look up what the stock was for T2 before the take over? If you know simple math their stock was about $16 and that was including GTA4's value.[8]
The offer totaled roughly $2 billion, which Take-Two execs insisted was undervalued and was an opportunistic attempt to piggyback on the success of Grand Theft Auto IV, which is set for an April 29 launch. As of this writing, Take-Two's shares were trading down $.37 to $25.88. [8] TTWO is trading at $25.87, down $0.22 or 0.84% on a volume of 1.45 million shares.[9] In Thursday's regular trading session, ERTS is trading at $51.95, down $0.07 or0.13% on a volume of 1.09 million shares.[9]
Shares of Electronic Arts closed Wednesday at $52.02, while Take-Two shares closed at $26.09.[5] Take-Two is attempting to fend off a $2 billion hostile bid by Electronic Arts Inc., the world's biggest video game publisher.[13]
EA, EA SPORTS, EA SPORTS BIG and POGO are trademarks or registered trademarks of Electronic Arts Inc. in the U.S. and/or other countries.[4]
WRONG. Grand Theft Auto IV is main if not the only reason why EA wants to buy Take 2 ASAP. Plus, it will sell WAY more than just 6 million in 1 YEAR. Try ONE WEEK. [11] First off there isn't a possibility of TT going to EA. Or well there IS a possibility but I don't know, it seems very unlikely. That's just personal opinion. Even if EA does buy them out I'm sure it'll still sell on the 29th of this month. I mean they can lose a lot of money not selling it.[8]
Can you imagine 3-5 million pissed of gamers? I don't think EA's reputation could handle another blow like that. Let's just hope that T2 does give in and sell-out that EA does not have the power to change anything about the game, including it's release date. [8] Although on the other hand, acquiring T2 justs shows that EA is a greedy company trying to dominate the gaming market by buying out creative (and games that will generate good money) other than develop great games themselves.[8]
You seem to dislike EA but decide to turn a blind eye on T2's actions. Did you read about their severance plan? Or how they forgot to mention the private offer EA made to their share holders? Did you forget about how they haven't made any profit in 2 years? Yeah I'm sure you have.[8] EA's offer is set to expire Friday night. Last month EA extended its offer but said it would at least need a promise that the poison pill won't apply to its current takeover attempt.[3]
The company stated that the amendments were on account of the adoption of a poison pill by Take-Two and postponement of Take-Two's annual meeting of stockholders to April 17.[9] This communication does not constitute a solicitation of any vote or approval at the Company's annual meeting of stockholders or otherwise.[12]
The period of time for stockholders to be able to nominate persons for election to the Board of Directors or to propose any business to be considered at the upcoming Annual Meeting expired on April 15, 2008.[12]
The company said that while it believes the proposed transaction with Take-Two would not be anti-competitive, the FTC has not yet reached any conclusions regarding the proposed acquisition and has indicated that it needs further information and additional time to conduct its review. [9] Take-Two's common stock is publicly traded on NASDAQ under the symbol TTWO. For more corporate and product information please visit our website at www.take2games.com. All trademarks and copyrights contained herein are the property of their respective holders.[12]
All times are ET. : Time reflects local markets trading time. - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Disclaimer[2] The stock has been trading in a range of $43.62-$61.62 in the past 52 weeks.[9]
Video game makers are vying with each other to get a bigger share of the fast growing global video-game industry, which is projected to grow over 9% a year and is estimated to be worth more than $48 billion in 2011.[9] Even with news that the release of GTA 4 is expected to blow out all previous sales records, the share price for take two manages to go DOWN.29. They aren't actually developers, but they have the most gain if it does really well.[8]
Take-Two today announced that the April 15 deadline for shareholders to nominate opposing candidates for the company's board of directors or propose other new business has passed without incident.[8] It seems odd that EA believes Take-Two stockholders would be foolish enough to even consider their proposal before GTAIV hits streets.[6] All of us gamers need to stop nagging which game is better and support the good product regardless which is older. Might as well enjoy them while we can, next thing you know EA will be bidding for Violation (opps I"ve given them an idea) my work here is done.[8] How? Getting sued. Boxes are out, reservations are reserved, and you think they can get away with pushing it back without getting something in return? TT needs money. They used a lot of it and time to make this game. Theres no way they can afford to push it for the holidays.[8]
In fiscal 2007, EA posted revenue of $3.09 billion and had 24 titles that sold more than one million copies. [4]
SOURCES
1. Free Preview - WSJ.com
2. Electronic Arts gets second information request from FTC
3. FTC wants more time to examine EA $2B purchase of Take-Two Software - East Bay Business Times:
4. EA Receives Second Request From FTC
5. Electronic Arts gets second information request from FTC about acquisition
6. Gamasutra - EA Receives Second Anti-Competition Inquiry From FTC
7. Take-Two Shareholders Set To Vote On EA Posion Pill. But Pay Attention to GTA IV Sales* - Silicon Alley Insider
8. All quiet on the Take-Two front - Xbox 360 News at GameSpot
9. Electronic Arts Receives Second Information Request From FTC On Proposed Take-Two Acquisition - Update [ERTS] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
10. Big Grand Theft Auto IV sales would boost Take-Two - BloggingBuyouts
11. Why GTA IV Won't Help Take-Two (TTWO) Avoid EA (ERTS) - Silicon Alley Insider
12. Take-Two Interactive Software, Inc. Does Not Receive Stockholder Proposals Ahead of Annual Meeting
13. Take-Two does not get shareholder proposals
14. Take-Two Wins Its "Hot Coffee" Lawsuit (TTWO) - Silicon Alley Insider
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