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.
Sound 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.
EA, 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.