Dr_J
08-18-2008, 02:09 PM
Microsoft should swoop in and offer more money to take them out from under EA.
http://news.moneycentral.msn.com/ticker/article.aspx?symbol=US:TTWO&feed=OBR&date=20080818&id=9038115
EA drops hostile Take-Two bid and enters talks
NEW YORK (Reuters) - Electronic Arts Inc will drop its hostile $2 billion bid for rival video game publisher Take-Two Interactive Software Inc on Monday and instead pursue private talks with the company.
While shares of Take-Two fell 4 percent on the specter that EA might walk away entirely, or come back with a lower bid, analysts said a deal was more probable now that friendly talks were in the offing.
EA said on Monday its chief executive, John Riccitiello, and Take-Two Executive Chairman Strauss Zelnick held talks over the weekend, and Take-Two's management has agreed to present its three-year product pipeline and financial forecasts to EA.
"I think EA called Take-Two and said 'you can either participate or not,"' said Wedbush Morgan Securities analyst Michael Pachter. "I think Take-Two ... is going to negotiate a dollar (per share) higher and then claim victory. A deal is going to get done."
EA, publisher of the popular "Madden," "Need for Speed" and "Rock Band" games, had in April offered $25.74 per share for Take-Two, which rejected the price as too low.
With no chance to add Take-Two's blockbuster "Grand Theft Auto" game to EA's roster before the holiday shopping season, EA said it was taking a second look at its offer price.
"That $25.74 was predicated on distributing their products at Christmas this year," EA spokesman Jeff Brown said. "Going forward, we are challenged to validate that $25.74 price."
Take-Two shares fell 77 cents to $24.07 in midday trading on Nasdaq. The stock stood at around $17 in February, just before EA's first offer was announced. EA shares were off $1, at $47.24 on Nasdaq.
REGULATORY REVIEW
EA's acquisition of Take-Two would spur wider distribution of "Grand Theft Auto," already one of the industry's most popular franchises, and add Take-Two's NBA basketball and MLB baseball titles, making it the largest sports game maker.
EA wants GTA and other games like "BioShock" and "Civilization" to boost its own line-up and meet the threat posed by rival Activision Blizzard Inc , maker of the hit "Guitar Hero" series.
Both EA and Take-Two showed signs of posturing on Monday, analysts said, citing a tacit threat by EA to cut its offering price or walk away, and Take-Two's insistence that it "remains unwavering" in its belief that $25.74 a share is "inadequate."
Take-Two added that it is also in talk with other parties, and several analysts suggested the company was angling to squeeze more from EA. They said a deal could be completed soon after the U.S. Federal Trade Commission completes its antitrust review of the proposed transaction, expected on Thursday.
"A mutual deal is going to have to be higher than $25.74, in order for the board of Take-Two to save face -- call it a dollar or two dollars more," said Hudson Square Research analyst Daniel Ernst. "EA can certainly afford to pay more."
Electronic Arts could also try another hostile bid, but would rather keep the deal friendly in order to keep the creative personnel at Take-Two from bolting, analysts said.
"The integration risk is that you lose the talent, and EA can't afford to lose the talent," said Janco Partners analyst Mike Hickey. They definitely win by getting the IP (intellectual property), but it's the talent that draws the quality and it's the quality that sells the games.
EA first pursued a deal for Take-Two privately last December. It announced an unsolicited offer of $26 a share in February and cut the bid to $25.74 a share in April because of the issuance of additional Take Two shares.
EA said that as a result of the weekend talks, it will let its tender offer for all outstanding shares of Take-Two to expire on Monday evening. EA previously extended the offer five times, in part to allow regulators time to review the deal for antitrust concerns, and after a lukewarm response from Take-Two shareholders.
Copyright 2008 Reuters
http://news.moneycentral.msn.com/ticker/article.aspx?symbol=US:TTWO&feed=OBR&date=20080818&id=9038115
EA drops hostile Take-Two bid and enters talks
NEW YORK (Reuters) - Electronic Arts Inc will drop its hostile $2 billion bid for rival video game publisher Take-Two Interactive Software Inc on Monday and instead pursue private talks with the company.
While shares of Take-Two fell 4 percent on the specter that EA might walk away entirely, or come back with a lower bid, analysts said a deal was more probable now that friendly talks were in the offing.
EA said on Monday its chief executive, John Riccitiello, and Take-Two Executive Chairman Strauss Zelnick held talks over the weekend, and Take-Two's management has agreed to present its three-year product pipeline and financial forecasts to EA.
"I think EA called Take-Two and said 'you can either participate or not,"' said Wedbush Morgan Securities analyst Michael Pachter. "I think Take-Two ... is going to negotiate a dollar (per share) higher and then claim victory. A deal is going to get done."
EA, publisher of the popular "Madden," "Need for Speed" and "Rock Band" games, had in April offered $25.74 per share for Take-Two, which rejected the price as too low.
With no chance to add Take-Two's blockbuster "Grand Theft Auto" game to EA's roster before the holiday shopping season, EA said it was taking a second look at its offer price.
"That $25.74 was predicated on distributing their products at Christmas this year," EA spokesman Jeff Brown said. "Going forward, we are challenged to validate that $25.74 price."
Take-Two shares fell 77 cents to $24.07 in midday trading on Nasdaq. The stock stood at around $17 in February, just before EA's first offer was announced. EA shares were off $1, at $47.24 on Nasdaq.
REGULATORY REVIEW
EA's acquisition of Take-Two would spur wider distribution of "Grand Theft Auto," already one of the industry's most popular franchises, and add Take-Two's NBA basketball and MLB baseball titles, making it the largest sports game maker.
EA wants GTA and other games like "BioShock" and "Civilization" to boost its own line-up and meet the threat posed by rival Activision Blizzard Inc , maker of the hit "Guitar Hero" series.
Both EA and Take-Two showed signs of posturing on Monday, analysts said, citing a tacit threat by EA to cut its offering price or walk away, and Take-Two's insistence that it "remains unwavering" in its belief that $25.74 a share is "inadequate."
Take-Two added that it is also in talk with other parties, and several analysts suggested the company was angling to squeeze more from EA. They said a deal could be completed soon after the U.S. Federal Trade Commission completes its antitrust review of the proposed transaction, expected on Thursday.
"A mutual deal is going to have to be higher than $25.74, in order for the board of Take-Two to save face -- call it a dollar or two dollars more," said Hudson Square Research analyst Daniel Ernst. "EA can certainly afford to pay more."
Electronic Arts could also try another hostile bid, but would rather keep the deal friendly in order to keep the creative personnel at Take-Two from bolting, analysts said.
"The integration risk is that you lose the talent, and EA can't afford to lose the talent," said Janco Partners analyst Mike Hickey. They definitely win by getting the IP (intellectual property), but it's the talent that draws the quality and it's the quality that sells the games.
EA first pursued a deal for Take-Two privately last December. It announced an unsolicited offer of $26 a share in February and cut the bid to $25.74 a share in April because of the issuance of additional Take Two shares.
EA said that as a result of the weekend talks, it will let its tender offer for all outstanding shares of Take-Two to expire on Monday evening. EA previously extended the offer five times, in part to allow regulators time to review the deal for antitrust concerns, and after a lukewarm response from Take-Two shareholders.
Copyright 2008 Reuters