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Gaming giant Electronic Arts bids $2b for Take-Two Interactive

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Associated Press / February 25, 2008

SAN FRANCISCO - Electronic Arts Inc. yesterday said it was pushing ahead with a bid to take over upstart gaming rival Take-Two Interactive Software Inc., despite rebuffs from the smaller company.

EA said in a statement that it was making an all-cash bid of $26 per share, or about $2 billion, for New York-based Take-Two, known for its Grand Theft Auto franchise.

EA, the world's largest independent video game publisher, said it was releasing details of the proposal to get the attention of Take-Two shareholders after Take-Two's board turned down its second bid in two weeks.

The offer represents a 64 percent premium over Take-Two's closing stock price of $15.83 on Feb. 15, the last trading day before Redwood City-based EA made its proposal. Take-Two shares closed at $17.36 Friday.

"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 John Riccitiello wrote in a letter to Take-Two released yesterday.

Riccitiello added that Take-Two's quick acceptance of the offer would mean EA could put its marketing muscle behind the eagerly awaited release of Grand Theft Auto IV, set for April 29.

In its response, Take-Two called the EA offer a "highly opportunistic" attempt to take advantage of the game's upcoming release.

"Electronic Arts' proposal provides insufficient value to our shareholders and comes at absolutely the wrong time," Take-Two chairman Strauss Zelnick said in a statement yesterday.

Zelnick said EA rejected Take-Two's offer to resume discussions of the takeover bid the day after Grand Theft Auto IV hit store shelves.

EA said it offered $26 per share on Tuesday after Take-Two rejected a $25-per-share bid earlier this month.

The offer comes as Take-Two works to regroup following a rocky year.

Shareholders threw out most of the company's top leadership last spring over poor results as well as accounting troubles and controversy surrounding violent and sexual content in the company's games.

Several former Take-Two executives, including chairman and CEO Ryan A. Brant, pleaded guilty in 2007 to falsifying business records in connection with a probe into backdated stock options.

Also last year, the British Board of Film Classification refused to certify Manhunt 2, a gory game which received an adults-only rating from the Entertainment Software Rating Board in the United States.

EA, which publishes the Madden NFL and FIFA Soccer series among its popular sports franchises, has been working recently to beef up its product lineup with a wider variety of titles.

In January, the company closed its acquisitions of BioWare Corp. and Pandemic Studios, known for their action, adventure, and role-playing games, in an $860 million deal, the largest in EA's history.

Earlier this month, the company announced that Spore, the highly anticipated game from Sims creator Will Wright, will go on sale on the weekend of Sept. 7.

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