Electronic Arts pushes buy-out offer on Take-Two Interactive.
For weeks, there have been rumors speculating that Take-Two Interactive would be subject to an acquisition bid. Many thought Viacom would seek to buy them out at a one-time price of $1.5 billion. It turns out Electronic Arts wants Take-Two shareholders to part at $25 a share, roughly a $2 billion dollar deal. Take-Two swiftly rebuffed the idea, so EA offered them a $1 more a share, warned them about their financial future, and went public with the entire negotiation, contrary to their original pledge not to.
EA corresponded with commands, while Take-Two remained cordial and steadfast. Clear in all of EA's communications is that this deal needs to happen before Grand Theft Auto IV ships. Take-Two responded on time with a dismissal. EA retorted with the $26 a share, your future is doomed, so cave in before you ship GTA IV deal. Everyone's expectations of GTA IV are high, so it's no surprise that Take-Two agreed only to talk after the game ships.
EA highlighted their main talking points to Take-Two:
- There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA’s strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year’s holiday selling season.
- We believe Take-Two’s current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.
- With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.
Take-Two felt that Electronic Arts was "undervaluing" their company, being opportunistic in their timing, and thoroughly irresponsible to engage until after their prize title ships.
The entire contents of the companies' correspondence are available at businesswire.com.