The Take-Two/Electronic Arts Soap Opera Continues
Apparently, last night at the Take-Two shareholder’s meeting EA’s offer was rejected EA’s as too low. Chairman had this to say regarding the offer:
“The board believes that Take-Two is worth more than $26 per share. That said, we are 100% committed to creating more value for stockholders, and will consider all options, including staying independent. We’re in the position of generated shareholder value in a sector at the fastest-growing segment of the entertainment industry. EA’s offer came at a highly opportunistic time, as it comes right before the launch of the next installment in the most successful franchise in this entire industry. We’ve received several advance reviews, and with one exception, they are all perfect scores. My mom couldn’t write a bad review about this game.”
As if GTA IV was not enough to give them pause, apparently they feel that they can compete with EA Sports:
“We don’t think the EA offer properly compensates you, the shareholders, for the synergies EA would enjoy. Analysts valued said synergies at over $210 million per year, with EA enjoying massive savings from not having to compete with Take-Two’s sports line. When we take on EA in sports head-to-head, we beat them every time.”
Shareholders also voted to keep let current board members keep their jobs until 2009, which means that Strauss Zelnick and the rest will be around for another year at least – which makes Zelnick a very happy chap indeed:
“Today’s vote demonstrates stockholders’ confidence in management and the Board of Directors of Take-Two. The Board and management remain committed to acting in the best interests of stockholders. We are confident in the significant growth potential of Take-Two and in the unique value of our business given our strong position in this dynamic industry.”
He is probably also happy that ZelnickMedia, Take-Two’s manager, would receive 1.5 million shares of restricted stock. This made EA communications boss Jeff Brown make a quip about the approval and compared it to :
“Asking your last employer to give you a million dollar raise and forcing your new employer to pay it.”
Strauss Zelnick also only opened the floor up to two questions. First, Zelnick refused to answer the question as to whether Take-Two had entered into any “confidentiality agreements with other potential buyers” as it previously stated last month. Secondly, he also refused to comment on the announcement that the Federal Trade Commission was investigating whether an EA takeover would violate antitrust laws – which is absolutely true considering that the combining of 2K Sports with EA would mean that EA Sports would have a monopoly on all FIFA, NASCAR, NBA, NCAA (basketball and football), NFL, NHL, MLB, and PGA games. Even Michael Patcher has said as much.
Now comes word through a press release that EA has extended the offer, but for a little less than $26 per share, now it is at $25.74 per share. Via the press release:
The new price, which still values Take-Two at $2 billion, takes into account additional shares to be issued following stockholder approval of an incentive stock plan at its annual meeting on Thursday. The lower price makes good on Electronic Arts’ warning that its per-share bid would fall by 26 cents if the incentive plan was passed.
“Their price is capped. They will not do a deal that is not accretive to fiscal 2010,” said Kaufman Bros analyst Todd Mitchell, adding that EA could raise its bid by a dollar or two at most.
“If it doesn’t get done it doesn’t get done. They cannot overbid for this. EA has very strong revenue story but a weak earnings story,” Mitchell said.
Stay tuned for more of “As the Stomach Churns”.
Thanks for all of the updates: Videogaming247