EA tries to buy Take-Two.

[Azazel]

EA proposes to buy Take 2 for US$2 billion
And the consolidation continues.

Electronic Arts, the world's biggest third party publisher, has announced that it proposes to acquire Take Two Interactive in an all cash merger. The deal is for US$26 per share, a 64% premium over Take Two's current stock price, and an overall spend of US$2 billion for the makers of Grand Theft Auto.

The proposal was initially sent to the Board of Directors at Take-Two, who rejected the offer, but EA have now made the letter public to bring it to the attention of Take-Two shareholders. It has been rumoured for some time that Take Two were in a position for a takeover, with media giant with Viacom apparently linked with a US$1.5 billion deal, which EA has topped substantially and warned Take Two shareholders “There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today.”

EA Chief Executive Officer John Riccitiello was quoted as saying “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. Take-Two’s game designers would also benefit from EA’s financial resources, stable, game-focused management team, and strong global publishing capabilities.”

The deal is still on the burner, we'll let you know of any developments.

http://palgn.com.au/article.php?id=10490

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Ouch.

This feels like a bad thing.

[NiX]

It never feels good with EA. Though I don't see a significant loss here as I really don't find much interest in GTA or most of the TT games.

[Fabricated]

I guess Take Two told EA to fuck off with their offers until after GTA4 drops to see if they're still interested when there's no blockbuster launch to get in on.

[schild]

Yes, this is a fine example of EA buying a company for one soon to be released title. Possibly, maybe, so they can gut the rest of Take 2. Maybe they haven't learned a damn thing?

[Miasma]

Take two's stock jumped 50% higher this morning.  Fucking hindsight, I should have realised something like this would happen.  Now the question is if there will be a bidding war with Activision and maybe even Newscorp.

[eldaec]

Yes, this is a fine example of EA buying a company for one soon to be released title. Possibly, maybe, so they can gut the rest of Take 2. Maybe they haven't learned a damn thing?

So I keep reading everywhere. Only GTA4 isn't going to make 2 billion dollars.

And it's not as if GTA has any way to become a bigger deal, so either EA believe they can use TTWO to develop more adult franchises (Max Payne goddamit), or they are doing this purely for shits and giggles.

Since there is no reason EA couldn't set up an exact clone of TTWO for next to nothing or just poach key people at TTWO, I'm guessing it's the latter.

If I were an EA shareholder I'd be pissed at this offer.

Monumental waste of money.



OTOH, if I were a TTWO shareholder, I'd naturally be ripping EA's dumb corporate arm off.

Now the question is if there will be a bidding war with Activision and maybe even Newscorp.

Only if one or both of those companies is managed entirely by halfwits.

[Yegolev]

Only if one or both of those companies is managed entirely by halfwits.

Entirely possible.

[SnakeCharmer]

Good golly Mrs Molly...

Makes the buying price of BioWare look cheap by comparison....

[Azazel]

Well, comparing Bioware and Take-Two Interactive is like comparing apples and goats.

Different beasts.

[Velorath]

I hope for Take-Two's sake they never end up going through with this (they've left it open to be discussed the day after GTAIV releases).  Getting bought up by EA must be akin to ending up on The Running Man and stumbling upon the bodies. 

"Westwood, Origin, Bullfrog. Last season's winners..."

[KallDrexx]

I hope for Take-Two's sake they never end up going through with this (they've left it open to be discussed the day after GTAIV releases).  Getting bought up by EA must be akin to ending up on The Running Man and stumbling upon the bodies. 

"Westwood, Origin, Bullfrog. Last season's winners..."

The word from my real life friends who work at Pandemic Studios is that EA has kept their word so far to not fuck with the great culture of the company. 

Sure the deal is only 4 or so months old, but it is possible for EA to realize it's screwed itself over before by messing with their acquisitions.

[Stormwaltz]

The word from my real life friends who work at Pandemic Studios is that EA has kept their word so far to not fuck with the great culture of the company. 

Ditto BioWare.

The caveat is that it took six months to a year before EA stepped in on the aforementioned studios. Not doomsaying, just observing...

[NiX]

I know you can get in trouble, but keep us informed. I'd hate to see Bioware get messed with. Obviously you guys have something good going on at your company, no point in ruining it.

[Azazel]

I guess our hope is that since whatsisface recently acknowledged the way they fucked up the others they swallowed, that they might be a little more hand-off to their newer aquisitions.

Until the next buisiness-management suit comes along and decides to "shake things up" and all the good staff leave to form new companies, which will then be swallowed up again later down the line...

[Trippy]

The assimilation takes a while. It's only after a by-the-numbers sequel or two, the loss of key personnel and a forced relocation (assuming you still want your job) that you realize what has happened. For example EA could've, in effect, had the Call of Duty franchise if they hadn't Borg'd the Medal of Honor guys, forcing them to make one mind-numbing uninnovative sequel after another.

[MahrinSkel]

EA wants this because they need to retain their status as the largest video-game publisher.  For EA, making games is to a degree an excuse to sell stock and float bonds, and they enjoy status as the closest thing to a "blue chip" the industry has.  When an institutional investor is looking to spread out his entertainment portfolio by doing something in games, EA's their only real option.  But they have to stay the biggest, or their demand goes soft, and they can't keep raking in that Wall Street cash.  Ditto for their franchise purchases of the past, the way the market analyzes these things they aren't buying the shop or the talent, they're buying the marketshare.

Supposedly the new EA has turned over a new leaf, and is not using the old playbook to slowly squeeze the life out of their victims anymore.  I do know that certain key aspects of that process (especially the so-called Flying Circus) do seem to be absent.  So there's a least a little hope that EA has realized that eating the game industry's young was not a sustainable business model.

--Dave

[LanTheWarder]

EA wants this because they need to retain their status as the largest video-game publisher.  For EA, making games is to a degree an excuse to sell stock and float bonds, and they enjoy status as the closest thing to a "blue chip" the industry has.  When an institutional investor is looking to spread out his entertainment portfolio by doing something in games, EA's their only real option.  But they have to stay the biggest, or their demand goes soft, and they can't keep raking in that Wall Street cash.  Ditto for their franchise purchases of the past, the way the market analyzes these things they aren't buying the shop or the talent, they're buying the marketshare.

Supposedly the new EA has turned over a new leaf, and is not using the old playbook to slowly squeeze the life out of their victims anymore.  I do know that certain key aspects of that process (especially the so-called Flying Circus) do seem to be absent.  So there's a least a little hope that EA has realized that eating the game industry's young was not a sustainable business model.

--Dave

Would buying Take-Two put them back into the ballpark with Activision-Vivendi? I know Activision and EA were competing for top dog status before the merger with Vivendi, but is Take-Two really on par with Vivendi?

[Morat20]

I admit I wasn't paying attention, but a friend of mine mentioned something about EA holding the rights to Alpha Centauri and Take Two owning 2k Games (which is what, last I checked Sid Meiers publishes his stuff through) -- so does this mean I might get a chance to see Alpha Centauri II?

[eldaec]

For EA, making games is to a degree an excuse to sell stock and float bonds, and they enjoy status as the closest thing to a "blue chip" the industry has. 

'Selling' stock (I assume you mean issuing new stock) is a 'bad thing'. Nobody aims to have to do that, it just reduces the value of existing stock (big scads of which will be owned by senior management), and is heavily frowned upon by investors unless you have a fastastically good reason to do it. And EA isn't active in the bond market (which is also wholly unprofitable activity, which costs you money every time). Even if issuing new stock and floating bonds could somehow make you money, the addition of TTWO certainly wouldn't allow them to raise 2 billion dollars.

This is management dick waving and little else.

the way the market analyzes these things they aren't buying the shop or the talent, they're buying the marketshare.

They can't possibly put it to the market like that. And if the market were to view it that way, people would start getting fired at EA. TTWO doesn't have half the marketshare you'd need to justify two billion dollars.

The only way this deal can be justified, either internally, or by any rational holder of Electronic Arts, is if TTWO provides strategic access to an area of the market where EA marketing knowhow can grow TTWO's business significantly more rapidly than TTWO could grow itself. I know this is bullshit, you know it is bullshit, but the only possible explanation here is that EA management believe in it, or believe they are going to retire before anyone notices they have randomly chosen to transfer wealth from EA stockholders to TTWO stockholders.

but is Take-Two really on par with Vivendi?

Fuck no.

[Slyfeind]

but is Take-Two really on par with Vivendi?

Fuck no.

Heh, at this point, there's not much left for EA to take over. No slight against Take-Two of course; they're towards the top of this particular pile of leftovers!

[Velorath]

Take-Two has officially announced that their new 2k Marin studio is working on Bioshock 2 (and that Ken Levine would be involved in some capacity).

[eldaec]

Take-Two has officially announced that their new 2k Marin studio is working on Bioshock 2 (and that Ken Levine would be involved in some capacity).

Oh, well then, that explains the unaccounted for $1.8 billion dollars in EAs assessment of Take Two's value to them.

[Miasma]

Going hostile.

[NiX]

Can the shareholders force an agreement to the offer before GTA4 ships?

[Miasma]

Sort of, the next stockholder meeting is on the tenth.  If enough shareholders accept the offer then EA will have a majority and be able to take over the company.  It's not really the shareholders forcing an agreement so much as them selling their shares to EA that is the issue right now.

[NiX]

I don't know how it works when a take over or buyout happens in this fashion, but wouldn't some kind of government approval have to happen or someone oversee the take over?

[Miasma]

Well I'm sure there's paperwork with the SEC and such but that's about it.  It's not like this is a vital segment of the economy where the government is worried about monopolies and will bring up antitrust type issues.

[NiX]

I'm beginning to wonder how far off EA is from becoming a monopoly. The Ubisoft fiasco a year or so ago was reason enough to question what they were doing.

[HaemishM]

Madden 2003 was enough to question EA's monopoly position. This is just bordering on insane.

[Montague]

Take Two tells EA to get bent. In the nicest possible way, of course.

NEW YORK - "Grand Theft Auto" publisher Take-Two Interactive told its shareholders Wednesday to reject a $2 billion buyout bid from rival video game company Electronic Arts, saying it's not enough.


But in the same breath the company said it will explore alternatives, even combining with EA or other third parties, to maximize its value for shareholders. But it wants to wait until after April 29, when "Grand Theft Auto IV," the latest in the blockbuster series, hits store shelves. The game is by far Take-Two's most popular and one of the best-selling franchises in the industry.

The $26-per-share bid turned hostile March 13 when EA took the offer directly to shareholders. Take-Two's board had asked for 10 business days to mull over the decision and that time ran out Wednesday.

Take-Two took several steps to prevent EA from going through with a hostile takeover. It adopted a 180-day shareholders' rights agreement, also known as a "poison pill." It kicks in if an outsider acquires 20 percent of Take-Two's shares or if an existing shareholder who already owns this much buys another 2 percent.

Chairman Strauss Zelnick said the rights agreement "will not, and is not intended to, prevent a takeover of the company on terms that are fair to and in the best interests of all stockholders."

Take-Two also moved back its upcoming annual shareholder meeting to April 17 from April 10 and amended its bylaws to give shareholders more time to nominate board members.

A representative for Redwood City, Calif.-based Electronic Arts Inc. could not immediately be reached for comment.

Take-Two Interactive Software Inc.'s shares have briefly climbed above $26 in recent weeks, but analysts are not expecting the offer to go much higher. The company said it has received other "indications of interest" since EA's offer became public last month, but there haven't been any "substantive discussions."

Take-Two said it is willing to start preliminary talks, including with EA, before April 29 under confidentiality agreements.

[Big Gulp]

I'm beginning to wonder how far off EA is from becoming a monopoly.

In the field of "games"?  Pretty far off.  Remember how big of a market this is, and just how many little indie publishers exist.  Then you factor in the Blizzard/Activision deal, and the fact that games (and movies, for that matter) aren't considered a crucial part of the economy and I don't see why the SEC would bat an eyelash.

As adverse as I am to EA even I wouldn't bat an eyelash.  Particularly when you consider that deals like Google buying Doubleclick sailed right on through, this seems like small potatoes to me.

[Miasma]

EA's bid isn't the sure thing they thought it would be.

[ahoythematey]

I was wondering what was going on with this.  If this takeover falls through, I think the potential for a bitter rivalry between the two companies is going to be awesome.  I'm already having dreams of fistfights over who climbs off each others moms while developing the better football experience.

[Slyfeind]

Is there some kind of "Corporate Buyouts For Dummies" out there? This makes no sense to me, but I have a feeling it's important somehow.

[Miasma]

EA had hoped that most of the shareholders would take them up on the attractive offer to buy their take two stock but that didn't happen.  Take two's board was reelected and upper management were given raises, which weakens EA's position.  It seems most of the shareholders expect EA to up their price or that GTA4 will itself boost the stock.  It's a game of chicken really.