Take Two Formally Rejects Offer from Electronic Arts

After it urged shareholders not to give in to Electronic

Arts' hostile bid Take Two's board has formally rejected the offer and stated that it will not enter any more negotiations until after the release of GTA IV in late April.

Strauss Zelnick, who is board chairman, stated: "Take-Two’s board of directors and senior management team were put in place less than one year ago with one mandate: maximize stockholder value. We have maintained a single-minded focus on that goal ever since and it remains the guiding principle in every decision we make with regard to Take-Two. Our board, after careful review, has unanimously determined that Electronic Arts’ offer continues to provide insufficient value and remains opportunistically timed to capture the value of the upcoming Grand Theft Auto IV launch at the expense of our stockholders".

Even if Zelnick stresses the idea that additional value could be created for the shareholders without giving in to the take over offer presented by EA it's difficult to see how that could happen. In the time since the current leadership has been in place Take Two's shares have never risen past the 26 dollars a share offered by EA and are now trading at around 17 dollars.

Michael Pachter, who is a games industry analyst for Wedbush Morgan, thinks that the leadership at Take Two has made a big mistake because it has "virtually no chance of finding a better offer". He also finds the idea that the value of Take Two will rise sharply after the release of GTA IV as being false, because game reviews and even solid sales need time to translate into better stock shares and better value for the company.

As far as Patcher is concerned, Electronic Arts was the perfect match for Take Two because of two things. First the sports related franchises of the two companies could have been merged, consolidating the market share and creating bigger profits, and second the GTA IV release could have profited from Electronic Arts' distribution muscle.

It's uncertain whether EA will continue to pursue Take Two after the release of GTA IV, but we are sure that we haven't seen the end of this saga.


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