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EA Extends Take-Two Offer

Grand Theft Auto IV is out the door—and setting sales records—but gaming giant Electronic Arts isn’t giving up on its unsolicited offer to buy out publisher Take-Two for $25.74 per share, or about $2 billion. Instead, the company ha extended its tender offer for outstanding shares of Take-Two stock, hoping it can convince enough investors to fork over their interest in the company so it can take over.

“Extending our offer will allow the FTC review process to continue,” said EA’s senior VP of corporate development Owen Mahoney, in a statement.”EA’s offer price remains unchanged at $25.74 per share and our offer is still subject to conditions that include regulatory approval.” As of last Friday, EA says about 6,210,261 shares of Take-Two were part of the tender offer; the new deadline to participate in EA’s tender offer is June 16.

For its part, Take-Two seems unimpressed. “This is the same highly conditional proposal that EA offered Take-Two stockholders on March 13, 2008, which our Board of Directors thoroughly reviewed and unanimously determined to be inadequate and contrary to the best interests of Take-Two’s stockholders,” said Take-Two CEO Strauss Zelnick in a response to EA. Take-Two also notes that those 6.2 million shares EA says have been offered up only represent about 8 percent of Take-Two’s total outstanding shares—not enough for EA to mount a takeover attempt.

Although Take-Two has said it’s open to the idea of a buyout, perhaps from EA, it wanted to wait until after GTA IV had shipped. It also feels that EA’s offer under-values Take-Two’s franchises, intellectual property portfolio, and future earning power: they’ve even launched a Web site to sum up their argument that investors should stay on board—or at least not sell to EA.

EA may be looking to Take-Two to boost its overall performance, as it recently scaled back its earnings expectations for the current fiscal year. Take-Two may also look to EA for stability: the giant publisher is more able to ride out the whims and storms of the video game market, whereas Take-Two has almost all its fiscal eggs in the controversial GTA franchise, with the possibility the award-winning BioShock may gain more industry momentum. However, for the moment, Take-Two and its investors seem content to keep going on their own path.

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