Electronic Arts announced Tuesday it was extending its tender offer for rival game developer Take-Two Interactive Software to July 18, marking its third extension since launching its hostile bid in March.
EA, which is currently offering Take-Two investors $25.74 a share, said nearly 6.14 million shares have been tendered in, representing approximately 8 percent of Take-Two's shares.
In early morning trading, Take-Two's stock hovered at $26.35 per share.
EA's previous deadline for its tender offer was June 16, which came roughly a week after Take-Two reported better than expected quarterly earnings, thanks to its record-breaking launch of Grand Theft Auto IV.
"We congratulate Rockstar on the successful launch of GTA IV but believe our offer reflects a full and fair price based on the long-term value of Take-Two's entire operation," Owen Mahoney, EA senior vice president of corporate development, said in a statement.
Mahoney said its offer price is a "substantial premium" to where Take-Two's stock traded at prior to its offer. Prior to going hostile with a tender offer directly to investors, EA had given Take-Two a bear hug by publicly announcing its unsolicited offer in February. Take-Two had closed at $17.36 a share, prior to EA's public announcement of its unsolicited bid.
EA, should it keep its tender offer alive, may have to add another extension beyond its July 18 deadline. That's because it's working on supplying the FTC with its requested information, at which point the FTC will then have 45 days to review it. If the FTC takes all 45 days, that would surpass EA's new extension deadline which is now set to expire in 32 days.
To the surprise of probably no one, Take-Two Interactive Software has rejected Electronic Arts' hostile buyout offer.
In an announcement Wednesday morning, Take-Two said its board of directors and company officers have recommended that shareholders reject EA's bid of $26 a share. The board also said it's developing alternative strategies for possible alliances with third parties, including EA, that would kick in after the April 29 of release of Grand Theft Auto IV.
Take-Two's board noted that "substantive discussions" about possible alliances have yet to occur, although it did emphasize that the company is now open to them. In its statement, the company said it "unanimously determined that the $26-per-share cash offer is inadequate in multiple respects and contrary to the best interests of Take-Two's stockholders."
Among the issues cited by the board:
• EA's offer undervalues Take-Two, especially in light of its 2007 initiative aimed at streamlining operations and cutting costs.
• Take Two's financial advisers, Bear Stearns and Lehman Brothers, objected to the financial terms of the offer, which, Take-Two separately noted, would be taxable for shareholders.
• The timing of EA's unsolicited offer is "opportunistic" in that it is intended to capitalize on the upcoming release of Grand Theft Auto IV, the newest installment in Take-Two's successful video game series.
• EA's offer does not reflect the potential "synergy value" that a combination of the two companies would create, including a larger distribution network, more opportunities to exploit "online, wireless, and other evolving platforms," and reduced administrative costs.
No comment yet from EA.
The drama surrounding Electronic Arts' attempt to buy Take-Two Interactive is, increasingly, playing out like a combination action-adventure and shooter game.
As noted in a story published Friday in The New York Times, Take-Two has become a moving target not only because of maneuvering by the company's officers but because of changes in its shareholder group.
The offer EA presented on Thursday directly to Take-Two shareholders--$26 per share, or about $2 billion--is essentially the same one it offered the video game publisher in February. But as the Times story points out, Take-Two's shareholder population has in the past month changed to include many short-term stakeholders who bought its stock with the intention of turning a quick profit should the deal go through and who, perhaps, will try to force EA to increase its offer. Take-Two shares were trading at $25.10 as of early Friday.
Take-Two said its directors will consider the offer over a 10-day period, but also said it won't negotiate the offer until after the release of Grand Theft Auto IV, on April 29. EA's chief executive, John Riccitiello, says it isn't practical to wait until the end of next month because EA needs all the time it can get to absorb Take-Two and make use of its assets in advance of the holiday season.
Hmm...maybe this falls into the massively multiplayer genre.
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