EA Extends and Amends Offer for Take-Two Interactive

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Electronic Arts has extended its offer to acquire all of the outstanding shares of Take-Two Interactive. EA has also slightly amended the terms of the offer to account for the results of Take-Two Interactive's annual shareholder meeting.
The latest version of the offer was set to expire today at 11:59 p.m. EDT, but the offer has been extended until the same time on May 16.


Yesterday, Take-Two Interactive held its annual stockholder meeting, where the board was re-elected and auditors were appointed. Importantly, for EA's offer, Take-Two Interactive shareholders approved the issuance of more shares for Take-Two Interactive's incentive stock plan. As a result, EA has reduced its offer from $26 per share to $25.74 per share. (This is a stark reminder of how when companies issue new stock for executive compensation plans, it devalues the stock held by existing shareholders.)

EA noted that as of 5 p.m. EDT on April 17, 6,432,787 shares of Take-Two Interactive had been tendered for the offer (and not withdrawn). That's just a small fraction of the around 77 million shares of Take-Two stock in circulation.

Take-Two Interactive continues to maintain that EA's offer undervalues the company (although several financial analysts still maintain that a transaction will occur at something close to EA's offer) and told shareholders again yesterday that they should wait until after the release of Grand Theft Auto IV on April 29, expecting that sales of the game will demonstrate the value of the company. EA argues that value is already priced into Take-Two Interactive's stock.

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