Carl Icahn's new target: Grand Theft Auto publisher Take-Two Interactive
Take-Two Interactive Chairman Strauss Zelnick may have a new best friend. Activist investor Carl Icahn has been gobbling up shares in the video game publisher best known for the wildly popular Grand Theft Auto series.Icahn is known for his sharp elbows. Earlier this year, he threatened to wage a proxy battle to elect a new board of directors at Lions Gate Entertainment and previously tangled with management at several media companies, including Yahoo and Time Warner.
On Thursday, Icahn revealed in a Securities and Exchange Commission filing that he has taken an 11.3% stake in the money losing publisher Take-Two. He shelled out $70.6 million to buy his shares. The SEC document showed that Icahn has invested aggressively in Take-Two over the last few weeks, buying up more than 6 million shares and call options, about two-thirds of his total, in December alone.
The filing said Icahn, through several different investing vehicles, bought Take-Two stock "in the belief that the shares were undervalued." It also made clear Icahn probably won't be holding his tongue on how management of Take-Two is doing: "The reporting persons may, from time to time, seek to have conversations with representatives of the issuer about the company." A representative for Icahn's investment company declined to comment, as did a spokesman for the video game publisher.
Take-Two has been led since March of 2007 by Zelnick, a veteran entertainment executive who previously served as president of 20th Century Fox and chief executive of record label BMG Entertainment. At the time, the company was coming off an accounting scandal involving its former leadership and Zelnick promised to turn it around with a new management team.
While Take-Two has put the taint of scandal behind it, Zelnick hasn't ended its financial woes. On Thursday, Take-Two reported a 47% increase in its net loss during the quarter ended Oct. 31. While 2008 release Grand Theft Auto IV was a monster hit, the company's sports game division has been a continuing disappointment, high-profile games such as Bioshock 2 have been delayed, and overall sales have slumped during the recession.
Last year, Zelnick waged a protracted and ultimately successful battle to prevent Electronic Arts from acquiring his company for about $2 billion. Since then, Take-Two's stock has plunged to $8.25, less than one third of the $26 per share that EA bid.
Top photo: Carl Icahn at the World Business Forum in 2007. Credit: Mark Lennihan/Asociated Press
Bottom photo: A scene from Grand Theft Auto IV. Credit: Rockstar Games