EA's Take-Two Bid Becomes Hostile

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Electronic Arts has commenced its hostile takeover bid for Take-Two Electronics.

Electronic Arts began by making a series of friendly acquisition offers to Take-Two Interactive that rose to a price as high as $26 per share in cash. Take-Two rejected the offer, claiming that the bid was too low and that Take-Two would prefer to wait until after the release of Grand Theft Auto IV, when the company felt it would be in a stronger position. EA issued press releases, appealing to investors (and provoking a class action lawsuit contending that Take-Two was violating its fiduciary duty).

Take Two responded further by implementing anti-takeover measures such as its employee severance plan that would make a takeover extremely expensive by heavily rewarding executives. Unfortunately for Take-Two, the company continues to stumble financially, having confirmed massive first quarter losses.

EA has now officially made a bid for Take-Two, offering to purchase outstanding shares of Take-Two at $26.00 per share in cash. The acquisition bid is conditioned on EA's ability to acquire a majority of Take-Two's fully diluted stock, on Take-Two entering into a merger agreement satisfactory to EA and that certain takeover provisions do not apply to the transaction. Essentially, the offer is the same as before, only EA is appealing directly to shareholders and the fiduciary responsibility of Take-Two's management rather than trying to do things the friendly way. EA's offer expires on April 11.

Take-Two responded to the offer by advising stockholders to take no action. The company said, "Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Take-Two's Board will review and consider EA's offer, and within 10 business days, will advise Take-Two's stockholders of the Board's position regarding the offer as well as its reasons for that position." Worded that way, it sounds as if Take-Two simply wants time to come up with a way of ducking EA's bid without making itself vulnerable to shareholder lawsuits.

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This page contains a single entry by Editor published on March 13, 2008 8:29 AM.

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