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EA Makes $2 Bln Offer for Take-Two

Geoff Duncan
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The world’s largest video game publisher Electronic Arts wants to get even bigger, going public with an all-cash $26-per-share bid to take over controversial game publisher Take-Two Interactive, mainly known for its Grand Theft Auto franchise but also titles like the award-winning BioShock and controversy-riddled Bully and Manhunt 2. Electronic Arts sent the unsolicited offer to Take-Two CEO Strauss Zelnick on February 19; Take-Two’s board rejected the offer, and now EA is taking it public, hoping to convince Take-Two’s shareholders that an EA takeover represents the best possible return on their investments.

At $26 per share, EA’s offer is valued at approximately $2 billion, and represents a 63 percent premium over Take-Two’s closing price over the last 30 days. EA initially offered $25 per share, but has increased its bid to $26 per share now that the takeover effort is public.

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"Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders," wrote EA CEO John Riccitiello in a statement. "Take-Two’s game designers would also benefit from EA’s financial resources, stable, game-focused management team, and strong global publishing capabilities."

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EA claims it has been taking with Take-Two about a takeover for about a year, but it held off on its proposal until it felt primary development on the much-anticipated Grand Theft Auto IV should be largely complete. EA has not announced any plans on how it would integrate Take-Two with its newly decentralized label-based organizational structure. EA does say it believes Take-Two games represent significant intellectual property and graet games; however, some titles (like those in the 2k Sports line) compete directly with existing offerings from EA.

In a statement, Take-Two’s board of directors categorized EA’s unsolicited offer as "inadequate," with CEO Strauss Zelnick putting the refusal in even stronger terms: "Electronic Arts’ proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives underway at the Company."

Take-Two has been at the center of considerable controversy in recent years, with the current management team put in place after a boardroom coup which saw investors threw out former CEO Paul Eibeler, who made Take-Two the first U.S. company to have its CEO convicted of wrongdoing in issuing stock option grants to employees. The company has also been struggling to recover from undisclosed explicit sexual content in its Grand Theft Auto III game, an incident that resulted in a multi-million dollar recall and retooling of the popular game, and tarnished the entire video game industry.

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Geoff Duncan
Geoff Duncan
Former Digital Trends Contributor
Geoff Duncan writes, programs, edits, plays music, and delights in making software misbehave. He's probably the only member…
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