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Category: Take-Two Interactive Software

Take-Two releases Grand Theft Auto: The Ballad of Gay Tony trailer, settles 'Hot Coffee' lawsuit


The highly anticipated trailer for the latest game in the family of Grand Theft Auto titles, and specifically in the fourth generation of the franchise, Grand Theft Auto IV: The Ballad of Gay Tony, was released this morning. To watch it, click on the video above.

It'll likely be a mature-rated title when it comes out on Xbox 360 as a downloadable add-on game for Grand Theft Auto IV on Oct. 29. (It will also be bundled with a disc-based collection called Grand Theft Auto: Episodes from Liberty City.)

The trailer, however, is pretty tame, unlike the "Hot Coffee" sex scenes contained in Grand Theft Auto: San Andreas that landed its publisher, Take-Two Interactive Software, in legal hot water four years ago. The New York game company today said it had settled a class-action lawsuit related to the incident for $20 million.

"Hot Coffee is officially over," said Michael Pachter, an analyst with Wedbush Morgan Securities.

The latest installment of the gritty GTA franchise involves Anthony "Gay Tony" Prince. Maybe more so than other GTA titles, this game tries to focus more on incorporating music into the gameplay, especially since Gay Tony is a nightclub owner.

Sales of the Ballad of Gay Tony are not expected to hit the levels reached by Grand Theft Auto IV, released last year as a disc-based game. Take-Two this afternoon said its sales for the quarter ended July 31 plunged 68% to $138.6 million. Its third-quarter net loss of $55.5 million contrasted with a profit of $51.8 million last year. The slump is mostly attributable to the lack of a GTA release in the quarter, analysts said.

-- Jevon Phillips and Alex Pham

Bioshock 2 delayed; Take-Two's stock takes a hit [UPDATED]

BioShock 2 Logo Just after Take-Two Interactive Software this afternoon said it would delay the release of BioShock 2 until 2010, investors punished the New York publisher's stock, pushing it down more than 12% in after-hours trading.

Take-Two shares plunged $1.12 to $7.86 after gaining 14 cents following its BioShock 2 bomb announcement.

BioShock is a marquee franchise for Take-Two, which also publishes Grand Theft Auto and 2K Sports games.

The move is bad news for the company's current fiscal year, which ends October 31, but great news for its 2010 fiscal year, said Jesse Divnich, director of analyst services at Electronic Entertainment Design & Research in Carlsbad, Calif.

"I expect them to dominate fiscal 2010," Divnich said. "BioShock 2, Max Payne 3, Red Dead Redemption, Mafia II, additional Grand Theft Auto Downloadable Content (DLC), and the possible launch of Agent should make fiscal 2010 the year of Take-Two. As far as I am concerned, Take-Two is just moving numbers from one financial year to another."

Take-Two also said its sales of older releases, so-called catalog titles, as well as retail orders of new releases, have been soft. With the economy eating into game sales and the delay of BioShock 2, the company forecast lower-than-expected earnings for the remainder of this fiscal year.

UPDATED: An earlier version of the post said it was unclear whether BioShock 2 could still hit store shelves this holiday, which falls into the company's 2010 fiscal year. After the release of the announcement, company executives said they expected the title to ship between January 2010 and June 2010. No BioShock 2 stocking stuffers this year.

-- Alex Pham and Ben Fritz

Take-Two staying solo, stock takes hit*

Grand Theft Auto IV This post has been updated with today's closing stock price.

--

After dismissing Electronic Arts' takeover attempts, Take-Two Interactive Software, publisher of the Grand Theft Auto video game series, said this morning that it had decided to remain an independent company.

The decision concludes a "strategic review" the New York-based game publisher initiated following the unsolicited $2-billion offer from EA. After being repeatedly rebuffed, EA walked last month.

Since stepping away from the table, Take-Two's stock has fallen by nearly a third from its highs earlier this year. Its shares spiked from $17.36 to $26.89 on Feb. 25, the day after EA announced its bid, and topped out at $27.65 on June 5. The stock today dropped $1.07, or 6.7%, to $14.86.

Take-Two said in a statement that it had engaged in "detailed discussions with various interested parties," but decided against a merger. Chief Executive Ben Feder noted that the company was in good financial shape with no debt and an undrawn credit facility of $140 million. It also had $338.7 million in cash and cash equivalents at the end of July, up from $77.8 million at the end of October 2007. The lion's share of the uptick came from the blockbuster launch of Grand Theft Auto IV in April.

-- Alex Pham

Image by Take-Two Interactive Software

EA: Game over on talks for GTA maker Take-Two Interactive*

Grand Theft Auto IV

* Updated at 5:35 p.m. with comments from Strauss Zelnick, chairman of Take-Two, and game industry analysts.

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Electronic Arts said today it has terminated talks to acquire Take-Two Interactive Software, ending a nearly yearlong effort by the world's largest video game company to buy the publisher of the Grand Theft Auto game franchise.

"After careful consideration, including a management presentation and review of other due diligence materials provided by Take-Two Interactive Software Inc., EA has decided not to make a proposal to acquire Take-Two," the Redwood City, Calif., company said in a statement released this afternoon.

The two companies have been locked in a stand-off for months, after Take-Two rejected EA's $2-billion offer as too low. EA brought the offer directly to Take-Two shareholders and extended its deadline for the bid to expire several times as the Federal Trade Commission reviewed the proposal for antitrust implications.

EA executives said today that their offer had been based on the ability to close the transaction in time to take advantage of the upcoming holiday sales.

"We've always maintained that time was of the essence," Owen Mahoney, senior vice president of corporate development and EA's chief deal negotiator, said in an interview. "We've said that the value of this transaction deteriorates over time."

EA's offer, valued at $25.74 a share, represented a 64% premium over Take-Two's stock price when the bid was made public in February. "In the end, we had a very different view on the value of Take-Two, and we have moved on," Mahoney said. Take-Two shares had gained 24 cents to $21.89 Friday.

Mahoney said EA would consider other acquisitions, as long as they fit with the company's two priorities -- improving the quality of its core game franchises and developing an online distribution business with higher operating margins than packaged games sold at retail stores. The company had nearly $2.7 billion in cash and short-term investments as of June 30.

In an interview, Take-Two Chairman Strauss Zelnick said his company had "a bright future ahead of us." Zelnick, who took the helm in a boardroom coup 18 months ago with a mandate to turn around the beleaguered company, said Take-Two has paid off its debts and is accumulating cash, thanks to a blockbuster launch of Grand Theft Auto IV in April. Zelnick also expressed optimism about the October launch of Midnight Club: Los Angeles, a racing game developed by the same studio that created Grand Theft Auto IV.

Analysts said Take-Two could still thrive as a standalone company. "As a smaller company, they would have to take their risks strategically," said Billy Pidgeon, analyst with IDC. "But they can't be jack of all trades. They're just not big enough."

Pidgeon said the company may have to focus its business more tightly around that while Take-Two's basketball games are well respected, its overall sports games business is a "moneypit."

Take-Two could still be an attractive acquisition target for a company with deep pockets, including Sony, which manufactures the PlayStation 3 game console, or Microsoft, which makes the Xbox 360 console, Pidgeon said. "Take-Two has a lot of development and marketing talent," Pidgeon said.

Zelnick confirmed in an interview that his company is in talks with a "strategic partner."

"We remain actively engaged in discussions with other parties," he said, but declined to give further details.

Analysts said EA still could return to the table. "If Take-Two's stock price settles back into the teens, we could see them come back again in a few months," said Michael Pachter, analyst with Wedbush Morgan Securities. "They walked away, but that doesn't mean they won't look at it again."

-- Alex Pham

Grand Theft Auto image from Silvio Sousa Cabral via Flickr

EA to let offer for Take-Two expire; deal still possible*

Grand Theft Auto IV

(Post updated at 1:30 p.m. with the companies' closing stock prices.)

Electronic Arts said it would not renew its $2-billion buyout bid for Take-Two Interactive Software, the game company behind Grand Theft Auto, when the offer expires tonight.

EA had set five previous deadlines and extended each. But the Redwood City, Calif.-based company said today that its offer, extended privately to Take-Two's board in December, was based on being able to absorb Take-Two in time for this year's holiday season.

"Our model assumed that we could integrate Take-Two’s products in our holiday portfolio this year," said EA spokesman Jeff Brown. "We are now at a point where that is no longer possible."

After Take-Two's board rejected the proposal earlier this year, EA took its bid directly to Take-Two's shareholders in a hostile tender offer in March. Since then, the transaction has been placed on hold while the Federal Trade Commission reviews the proposal for antitrust implications. That review is scheduled to be completed Aug. 21. "There’s nothing that leads us to believe the transaction would not be cleared," Brown said.

A deal could still happen. After EA notified Take-Two of its decision to let ...

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Update: Take-Two and Electronic Arts' staring contest

UPDATE JUNE 18: Take-Two has reached an agreement with the Federal Trade Commission to provide documents related to EA's proposed $2 billion buyout offer of the company, according to a notice posted today on the FTC's website.

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Take-Two Chairman Strauss ZelnickSound familiar? Electronic Arts today extended its $2-billion offer to the shareholders of Take-Two Interactive Software, the New York company that owns the Grand Theft Auto video game franchise. This extension, to July 18th, was EA's fourth since making its original bid in February.

This prompted a raspberry from Take-Two Chairman Strauss Zelnick (top right). "The latest extension of EA’s unsolicited, highly conditional tender offer does not alter the fact that their proposal still significantly undervalues Take-Two, a fact that is reflected in the overwhelming number of stockholders who still have not tendered their shares," Zelnick said in a statement, noting that fewer than 8% of Take-Two's shares have been tendered to EA.

Take-Two disclosed last week that it had refused to comply with a subpoena from the Federal Trade Commission, which is investigating the deal for antitrust issues. Take-Two said in a June 11 regulatory filing that the FTC request was "unnecessarily broad." It must have decided to make nice with the regulatory agency, because the FTC announced it had reached a deal with Take-Two, though it did not mention what the settlement entails.

Electronic Arts CEO John RiccitielloEA, for its part, negotiated a deal with the FTC that would let it narrow the scope of information it had to dish out in exchange for an expedited decision within 45 days of EA ponying up the required data.

Until the FTC gives the go-ahead, Take-Two's shareholders are unlikely to budge. "If you're a Take-Two shareholder, you wait until the last possible second," said Michael Pachter, an analyst with Wedbush Morgan Securities. "You lose all leverage by tendering now."

EA's hostile bid bypasses Take-Two's management. But that hasn't stopped Zelnick from recommending that his shareholders reject the offer.

Meanwhile, EA CEO John Riccitiello told shareholders at a conference held by William Blair & Co. that despite the extra scrutiny of the FTC, "It is not different than we had anticipated."

Neither Zelnick nor Riccitiello are blinking, it seems.

-- Alex Pham

Photos: Top photo of Take-Two Chairman Strauss Zelnick, courtesy of Zelnick Media. Bottom photo of EA Chief Executive John Riccitiello, courtesy of EA.

Take-Two and Electronic Arts locked in staring contest

UPDATE JUNE 18: Take-Two has reached an agreement with the U.S. Federal Trade Commission to provide documents related to EA's proposed $2 billion buyout offer of the company, according to a notice posted today on the FTC's website.

-----

Take-Two Chairman Strauss ZelnickSound familiar? Electronic Arts today extended its $2-billion offer to the shareholders of Take-Two Interactive Software, the New York company that owns the Grand Theft Auto video game franchise. This extension, to July 18th, was EA's fourth since making its original bid in February.

This prompted a raspberry from Take-Two Chairman Strauss Zelnick (top right). "The latest extension of EA’s unsolicited, highly conditional tender offer does not alter the fact that their proposal still significantly undervalues Take-Two, a fact that is reflected in the overwhelming number of stockholders who still have not tendered their shares," Zelnick said in a statement, noting that fewer than 8% of Take-Two's shares have been tendered to EA.

Take-Two disclosed last week that it had refused to comply with a subpoena from the Federal Trade Commission, which is investigating the deal for antitrust issues. Take-Two said in a June 11 regulatory filing that the FTC request was "unnecessarily broad." It must have decided to make nice with the regulatory agency, because the FTC announced it had reached a deal with Take-Two, though it did not mention what the settlement entails.

Electronic Arts CEO John RiccitielloEA, for its part, negotiated a deal with the FTC that would let it narrow the scope of information it had to dish out in exchange for an expedited decision within 45 days of EA ponying up the required data.

Until the FTC gives the go-ahead, Take-Two's shareholders are unlikely to budge. "If you're a Take-Two shareholder, you wait until the last possible second," said Michael Pachter, an analyst with Wedbush Morgan Securities. "You lose all leverage by tendering now."

EA's hostile bid bypasses Take-Two's management. But that hasn't stopped Zelnick from recommending that his shareholders reject the offer.

Meanwhile, EA CEO John Riccitiello told shareholders at a conference held by William Blair & Co. that despite the extra scrutiny of the FTC, "It is not different than we had anticipated."

Neither Zelnick nor Riccitiello are blinking, it seems.

-- Alex Pham

Photos: Top photo of Take-Two Chairman Strauss Zelnick, courtesy of Zelnick Media. Bottom photo of EA Chief Executive John Riccitiello, courtesy of EA.

Earnings juiced by GTA IV, Take-Two flirts with suitors

Niko Bellic of Grand Theft Auto IV

Take-Two Interactive Software, publisher of the blockbuster Grand Theft Auto IV game, is in "formal discussions" with potential suitors, Chairman Strauss Zelnick said today during the New York company's quarterly earnings call with analysts.

Take-Two has been the target of a $2-billion takeover bid by Electronic Arts, the game industry's 800-pound gorilla. Zelnick and his team at Take-Two have said the price was akin to highway robbery.

He didn't name names, saying Take-Two was not required to disclose the identities of its suitors with the Securities and Exchange Commission until the "discussions" turned into "negotiations." Silicon Valley corporate attorney Scott Dettmer gave a translation:

Discussions = "The first few dates, and talking vaguely about whether you like children or not."

Negotiations = "Talking about how many kids and how soon."

The way Zelnick sees it, his prospects improved significantly when Grand Theft Auto IV, which hit stores April 29, generated $500 million in sales during its first week. Those sales turbo-charged its second-quarter financial results -- revenue more than doubled to $540 million, from $205 million a year earlier, even though GTA IV had been out for only two days in the quarter ended April 30. Take-Two swung to a profit of $98 million, or $1.29 a share, from a year-earlier loss of $51 million, or 71 cents a share.

Investors were marginally impressed, nudging the company's shares, which had gained 34 cents to $27.65 in regular trading, up 7 cents to $27.72 after hours.

Still, Wall Street is betting that a merger will occur and that EA will cough up a bigger engagement ring. EA's current offer stands at $25.74 a share.

-- Alex Pham

Image of Grand Theft Auto IV courtesy of Take-Two's Rockstar Games.

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