Icahn shakes up Take-Two Interactive board
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Just a month after accumulating an 11.3% stake in Take-Two Interactive, the video game publisher behind such series as Grand Theft Auto and Bioshock -- activist investor Carl Icahn -- is taking over nearly half the seats on the company’s board.
In an agreement struck between Icahn and Strauss Zelnick, the former president of 20th Century Fox and now Take-Two’s executive chairman, three of the struggling company’s eight board members will not stand for reelection at the next annual shareholders meeting in mid-April. Among those stepping down is chief executive Ben Feder, who will retain his role as CEO.
They will be replaced on the slate nominated by the company by three preferred candidates of Icahn, including his son Brett, who works at his investment firm; Sunghwan Cho, a former director of finance for Atari who also also works for Icahn; and James L. Nelson, a director at Icahn Enterprises.
In exchange for the shakeup, Icahn has agreed to vote his shares for the full slate, including Zelnick as chairman and four other incumbents.
As part of the deal, Icahn agreed not to support any proxy votes at the annual meeting or to publicly disparage Take-Two or its leadership, according to a copy of the deal filed with the Securities and Exchange Commission. The new board members must resign, however, if Icahn’s holdings fall below 5%.
Zelnick and his team took over Take-Two in March 2007 after an accounting scandal and vowed to turn it around. The company has continued to struggle financially, however. In the fiscal year ended Oct. 31, Take-Two reported a net loss of $137.9 million, down from net income of $97.1 million the previous year. Its sports game division, in particular, has performed poorly.
In 2008, Zelnick and the board rejected a $2-billion takeover bid by Electronic Arts. Today, its market value is $781 million.
Icahn, who last year threatened to wage a proxy battle to elect a new board of directors at Lions Gate Entertainment and has previously tangled with the management of Time Warner and Yahoo, praised the board of directors for its ‘responsiveness’ in a statement. ‘I’m a firm believer in the long-term potential of the company,’ he added.
Zelnick and Icahn are far from strangers, as both serve on the board of directors of DVD retail giant Blockbuster Inc.
‘Advancing our stockholders’ interests is the Board’s guiding principle, and it’s in that spirit that we’ve undertaken a change in board representation,’ Zelnick said in a statement. ‘We have much to accomplish at Take-Two in the year ahead, and we welcome the new directors who each have experience in the entertainment industry and will help us achieve our objectives.” Take-Two shares were down 3% in early afternoon trading.
--Ben Fritz