EA to let offer for Take-Two expire; deal still possible*
(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 ...
... its current offer expire, Take-Two's board invited EA to a formal presentation, the first official face-to-face discussion. EA agreed to a meeting, which has yet to be scheduled, in which Take-Two is expected to share confidential information about Take-Two's business plans, product pipeline and internal strategy.
The announcement sent Take-Two's stock reeling. It dropped $1.09, or 4.4%, to $23.75. EA's offer, which expires at midnight EDT, is valued at $25.74 a share. Take-Two's board, led by Strauss Zelnick, has indicated that its New York-based company is worth far more.
Analysts said a merger is less likely now but not out of the question.
"We believe that we are closer to a transaction," said Edward Williams, an analyst with BMO Capital, "though given the wide disparity in price, by no means is a transaction highly likely."
EA shares fell 48 cents, or 1%, to $47.76.
-- Alex Pham
Photo: A scene from Take-Two's Grand Theft Auto IV. Credit: Take-Two's Rockstar Games