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EA's Take-Two takeover expires, talks begin

  • By Tor Thorsen, GameSpot
  • Posted Aug 19, 2008 5:28 am AEST

Madden publisher admits current hostile attempt will be unsuccessful; GTA maker confirms EA now part of its "confidential process to evaluate strategic alternatives."

For a brief moment this morning, it appeared that the six-month-long Electronic Arts/Take-Two Interactive takeover saga might have finally come to a close. In separate statements issued this morning, both companies confirmed that EA's most recent $2 billion tender offer to purchase all outstanding Take-Two stock at $25.74 per share would expire as of 11:59 p.m. tonight. The deadline was set after EA's bid became compliant with the Federal Trade Commission rules last month.

In an open letter to Take-Two chairman Strauss Zelnick, EA CEO John Riccitiello said, "Given the passage of time, we have to validate the assumptions used in the model to support our offer price of $25.74 per share in cash. In addition, we no longer believe we can integrate Take-Two ahead of the important holiday season. Accordingly, we require due diligence to support a transaction and are therefore letting the tender offer expire tonight."

However, as has been the case on several occasions prior, the EA/Take-Two mating dance is far from over. In fact, Take-Two appears to have gone from being vocally disdainful to semireceptive of EA's advances.

According to the letter, Riccitiello and Zelnick discussed the buyout offer last Friday on the phone. Yesterday, Zelnick sent Riccitiello his own letter inviting EA "to participate in Take-Two Interactive Software, Inc.'s formal process to evaluate the company's strategic alternatives." In the same letter cited above, Riccitiello said that EA is "pleased to accept [Take-Two's] offer."

In his letter, Zelnick said the next step is that "EA...enter into a confidentiality agreement" prior to "an in-depth management presentation...[that] includes material nonpublic information" by the Take-Two board. In said presentation, executives from the New York-based Rockstar parent will outline "significant strides since EA first expressed interest in the company...including information relating to our three-year product-release schedule and management's financial projections. The presentation also includes information about the underlying factors that have driven our strong operational and financial performance."

Why, after months of being ardently unreceptive of EA's offer, is Take-Two now sitting down with the company? One likely reason is its share price. In February, Zelnick said that his company would not entertain EA's offer until after the Grand Theft Auto IV launch in order to "maximize [Take-Two] stockholder value." As expected, the game shattered sales records, selling more than 8.5 million units worldwide during the 32 days after its April 29 launch.

However, GTA IV's NASDAQ boost to Take-Two was only temporary, and the publisher's share price has steadily slipped after hitting a 52-week high of $27.31 on June 5. As of press time, Take-Two's stock was at $24.20, $1.54 per share below EA's current offer--although still far above the $17.36 price it held on the last trading day before the offer was made public.

196 Comments

  • CookieGoat

    Posted Sep 7, 2008 12:48 am PT

    PLEASE don't let EA make the next gta, they'll f*ck it up big time.

  • Sumuran

    Posted Aug 26, 2008 1:21 pm PT

    For people commenting about GTA becoming a yearly franchise. Consider that since October of 2001 when GTA III was released, we've had Vice City, San Andreas, GTA 4, Vice City Stories, Liberty City Stories. In seven years since GTA III was released, Rockstar has made 5 more GTA games. 2 of which were average compared to the polish usually associated with their games. So really, Take Two isn't so far behind EA in releasing games yearly. Even if you consider the numerous ports, theres been a lot of GTA games.

  • killzone_gamer

    Posted Aug 22, 2008 4:27 pm PT

    Yay, a company resisted them
    Soon, tha gaming world will have 4 developers and publishers.
    SCE, Microsoft, Nintendo and EA.

  • Cloud737

    Posted Aug 21, 2008 3:39 am PT

    @ markharris31

    I agree democracy and capitalism work just fine... in theory. Thing is, what we have today isn't democracy. It's only a shadow of it.
    I consider "true" democracy the Athenian democracy (where ALL citizens - well, minus women, children and slaves - gathered to discuss and vote on a matter). However, that is long gone and we're only stuck with a shell of democracy. We really didn't have a choice, either (think about gathering up over 20 million people in a town square and having them discuss and vote issues). We may have, now (the internet works wonders), but I doubt we'll ever get to it.

    Anyway, my point is that today, democracy (literally, 'power of the people') stands to represent more the power of big corporations, big names and a few important individuals, rather than the power of the people. There can even be cases when the majority of people in a country don't agree to a certain law or event, yet they can do nothing about it because some big people have interest in keeping that law or causing that event.
    Also, the delay it takes for people to gather to reverse a wrongdoing (even if they had the same opinion a good amount of time before, even at the time the incident occurred or was announced to occur), and also the delay it takes for their decision to actually take effect makes it a bit impractical.
    Let's theoretically say that the president of the USA wanted today to declare total nuclear war on all countries (and that he had the necessary influence in the government and parliament to do so) and just mess up the world. Even if all the citizens in the US disagreed with his decision, they would have to wait till re-election so they can express dissatisfaction. By that time, the world might not even exist anymore.
    I know it's an extremely unlikely case, but please don't disregard the point of it - even if the majority of Americans disagree with their presidents actions (like how they don't like Bush and want the US soldiers to return home), by the time they have the power to effect anything, it might already be to late.

    Also, as you can notice, most Gamespot users commenting here don't like EA or the though of them getting Take-Two. Even if they represented the majority of US citizens, there's absolutely nothing they can do, and even if they did, they couldn't do it in due time.
    And I haven't even begun to talk about how (in my opinion) the majority of people can very well be stupid and repeatedly shoot themselves in the foot if they had the power (and thus would be better to keep them away as possible from having power). In this regard, even if a company severely rips-off it's customers, it can still very well survive due to the general mass of idiots blindly buying their products. This can even be easily done nowadays through exclusivity (so the consumer has no real choice of matter if they really want a certain genre to play), a point that was proved by both EA and Microsoft.

    This is the reason why I look dissatisfied with certain aspects of today's democracy. I recognize it's still far better than any of the tried regimes, though. Ultimately, though, I'm afraid the general mass of people is still easily outmaneuvered and manipulated by only a handful of people, as was in the Medieval Age.

  • mAttthhheaLy

    Posted Aug 20, 2008 2:33 pm PT

    Please don't buy Take-Two, EA. I couldn't stand GTA becoming a yearly half-arsed franchise like the rest of your games.

  • makemeweak

    Posted Aug 20, 2008 9:17 am PT

    Take Two could lose a lot of money by letting the takeover bid expire if their stocks drop any more. I wonder how long the negotiations will last...

  • spicyramen08

    Posted Aug 20, 2008 6:19 am PT

    Most of my game collections are EA games, for example: James Bong Nightfire, Agent Under Fire, Goldeneye, From Russia With Love, SSX, SSX3, GTA III, Vice City, and GTA IV. I have many others, but that's just to name a few. Anyone else?

  • Siz2005

    Posted Aug 20, 2008 5:36 am PT

    Wallenstein_15, since u put that, What I mean say is EA should stick to publishing. I meant to say publish not making or whatever missaid.

  • Crystall3d

    Posted Aug 20, 2008 4:55 am PT

    it s nice to see E.A hated by most american gamers aswell ,

  • mrjasler

    Posted Aug 20, 2008 12:22 am PT

    actually "detroithardcore" ... DefAde is more correct than you.. You said that EA released the 3DO which they did not. Trip Hawkins left EA to start 3DO.. this is something you did not say. Big Difference buddy..

  • detroithardcore

    Posted Aug 19, 2008 9:59 pm PT

    defade -do your homework before you comment on me "DUDE" Go look up the name Trip Hawkins see his relevance with EA and also see that he was responsible for 3DO...now shut your mouth and quit making comments on subjects you know absolutely nothing about

  • DefAde72

    Posted Aug 19, 2008 9:41 pm PT

    quote - "detroithardcore

    Posted Aug 20, 2008 4:23 am GMT

    At one time EA thought they had enough big guns under their belt to try and take on Nintendo and Sega. They released the short lived console 3DO (which I owned btw) Problem was...They didnt have enough big names to keep em afloat, plus the price of the system itself was unheard of at the time so it collapsed. Now imagine a world where EA owns the top 20 titles that gross more than any of the competitors single big name titles, and they want to try their hand at the console world again. Think it cant happen?

    Thats what Nintendo and Sega said back before EA even had huge names. I think its a possibility and thats why they keep taking over companies. Agree or disagree you cant deny facts."

    err... the 3DO had absolutely nothing to do with EA dude, EA have never designed, manufactured, or released their own console... and likely never will

  • detroithardcore

    Posted Aug 19, 2008 8:23 pm PT

    At one time EA thought they had enough big guns under their belt to try and take on Nintendo and Sega. They released the short lived console 3DO (which I owned btw) Problem was...They didnt have enough big names to keep em afloat, plus the price of the system itself was unheard of at the time so it collapsed.

    Now imagine a world where EA owns the top 20 titles that gross more than any of the competitors single big name titles, and they want to try their hand at the console world again. Think it cant happen?

    Thats what Nintendo and Sega said back before EA even had huge names. I think its a possibility and thats why they keep taking over companies. Agree or disagree you cant deny facts.

  • Duke_Bootee

    Posted Aug 19, 2008 7:07 pm PT

    if EA buys out T2 the creativity of videogames will come to a standstill

  • Duke_Bootee

    Posted Aug 19, 2008 7:00 pm PT

    TO ALL TAKE TWO SHAREHOLDERS READING:
    If you take up EA's offer i will come to your house and i will eat your heart

  • Viral-venom13

    Posted Aug 19, 2008 4:36 pm PT

    Well there is as much positive to this issue as there are negatives. Positives lie in the fact that well both companies will be working together which means more profit and way better games being marketed by EA but on the negative it can affect the way of how some of Rockstar's familiar franchises may play out and vice versa for EA. As long as the games that Rockstar produces don't shift for the worst then i'm good with it although the thought of these 2 companies merging is still a bad idea in my opinion. Oh well it seems the cat and mouse chase is coming to an end and something probably for the better or worst may be forming!!

  • PandaBear86

    Posted Aug 19, 2008 3:58 pm PT

    Take-Two holds the publishing rights for Duke Nukem Forever, so it would be funny if EA took over. Duke Nukem takes 11 years to make, but then gets a new game every year. Lol.

  • icuyo

    Posted Aug 19, 2008 3:37 pm PT

    Pheww that was close for Take 2 , on other stuff , im glad that Valve holds the rights to the Half-Life franchise , because if you dont own the IP of your games and sign with EA for partenrship , then its "good bye IP" "hello sucky yearly EA sequels"

  • roadstar93

    Posted Aug 19, 2008 1:05 pm PT

    If EA takeover Take-Two I Hope The Games won't change much, but on the other hand I love Need For Speed all series

  • markharris31

    Posted Aug 19, 2008 11:57 am PT

    @Wallenstein 155
    It's not EAs fault that people don't look at the other stickers on the box. EA puts millions of dollars into the marketing, PR, and distribution of games through EAP, so they have every right to put their logo on the box. If it was such a bad program, and EA was such a worthless, evil company and partner, why would great developers like Valve and FreeRadical sign on to EAP?

  • saintsrowCS

    Posted Aug 19, 2008 11:18 am PT

    If there is a take over I can only hope 2K works on the NFL series so we can get a good NFL game and Madden fanboys will love, buy it since it has a Madden sticker on it.

  • klugenbeel

    Posted Aug 19, 2008 11:16 am PT

    EA needs to back the F*** off!

  • Wallenstein_155

    Posted Aug 19, 2008 10:56 am PT

    Siz2005, EA didnt make Orange Box or Timesplitters: Future Perfect. Valve made Orange Box, and FreeRadical made Ts:FP. It was part of the Partnership Program where EA just uses its publishing power for the developers, then its people who don't read the labels, they just see the big fat EA label on the game and think, "wow, EA made this game" Again, like in one of my rants I made earlier, EA gets all the credit because people are too ignorant to read, when EA didnt do jack in the development process

  • cajunstrike

    Posted Aug 19, 2008 10:17 am PT

    Agreed. It will be interesting to see what influences, if any, 2K Sports has on the EA Sports franchises.

  • Get_Shorty

    Posted Aug 19, 2008 9:59 am PT

    I would finally buy a Madden game if Take-Two and EA joined forces.

  • stevo_360

    Posted Aug 19, 2008 9:10 am PT

    EA aren't that bad, only the sport game parts of take-two will really be negatively affected by this.

  • railroberto2007

    Posted Aug 19, 2008 9:08 am PT

    Tired of hearing about this

  • markharris31

    Posted Aug 19, 2008 9:00 am PT

    I like the direction that EA is going with their EA Partners program. Essentially they get to put their name on products from great independent developers that want to use EA distribution and marketing resources while maintaining creative and developemental control over their games. Epic, Grasshopper, Crytek, Id, Valve, etc. have all signed on for EA Partners. Between that program, and improving the development pipeline of their internal studios, EA could be looking at a very bright future in the gaming industry.

  • Siz2005 posted Aug 19, 2008 8:47 am PT (does not meet display criteria. login to show)

    Siz2005

    Posted Aug 19, 2008 8:47 am PT (hide)

    EA do make a few great games like The Orange box and I have a feeling the new Need for Speed game will do well. I know there last two need for speed game sucks but I take it Uncover will be very good as it was with Most Wanted.

    P.S Im not a EA fan but they have release Very very few great, another one is Timespiltter Future Perfect.
    I still hope that EA never Buy Take Two anyway.

  • Autolycus

    Posted Aug 19, 2008 8:34 am PT

    its only a matter of time before EA gets em

  • Hvac0120

    Posted Aug 19, 2008 8:31 am PT

    Curious as to what is going to come out of this. EA is getting invited into T2 board meetings? This sounds like T2 is working on merging instead of a buyout (which is basically the same, but essentially different 0_0).

    The way this article puts it, we shouldn't expect to see any results of these discussions until spring.

  • BigC43

    Posted Aug 19, 2008 8:22 am PT

    Perhaps an EA/Take Two Merger might be in the works...

  • Irishmandkg

    Posted Aug 19, 2008 8:07 am PT

    Man, I hate EA, all they do is buy smaller companies that make great games, and once EA buys them they churn out sequels on a yearly basis that always suck, EA make some good games and stop buying up companies that make great ones. Soon the gaming industry will just be EA vs. Actiblizzard.

  • markharris31

    Posted Aug 19, 2008 5:57 am PT

    @cloud737
    Democracy and capitalism work just fine. If you have a problem with the system look no further than yourself and your fellow citizens/consumers. In a free society and a free market economy the people have the power to change everything. Don't like what your government is doing? Don't vote to re-elect them. Don't like EA? Don't buy their products. It's really, really, really that freakin simple. I'm not kidding, it's that easy. Now, just because not enough people agree with you and continue to elect government officials you don't like and buy products from companies you don't like it doesn't mean the system is flawed, it just means that you have a minority opinion. You have two options: 1) take it like a man and realize that not enough people think like you for it to matter, or 2) try to convice others to agree with you so you can effect some change.

    I've never understood why people blame the system that allows the ultimate flexibility. The system works just fine. You'd better get crackin if you want to convice the millions of consumers who buy EA products that they should boycott the evil corporation who provides games for them to play.

  • toyota23

    Posted Aug 19, 2008 5:47 am PT

    yes i hate EA to! There are the worst!

  • D-Camo

    Posted Aug 19, 2008 5:44 am PT

    It doesnt really matter to me what game companies do, as long as they pump out awesome game, I'll swallow it whole.

    And this whole thing is how things are with game companies these days. The whole fracas over FFXIII going over to the 360 is one of them.

  • Nakor

    Posted Aug 19, 2008 5:24 am PT

    I hate EA so much. I really hope they don't get this deal through. EA can die.

  • tawagivercetti

    Posted Aug 19, 2008 4:56 am PT

    (pumps shotgun, for dramatic effect)
    EA come here so I can shoot you in your face.

  • ShadowOfKratos

    Posted Aug 19, 2008 4:31 am PT

    "blackace",

    mine neither, lol...

    but still, I have to admit EA got me pretty psyched up about Skate2 and NFS:Undercover.

    I just hope they manage to clean themselves up now.

  • blackace

    Posted Aug 19, 2008 4:05 am PT

    No EA, you can't have my Cheesey Poofs. That's a bad EA!! Bad! Bad!

  • TurambarGS

    Posted Aug 19, 2008 3:13 am PT

    @ pcgamer522

    Yeah, it's not actually as simple as that. I think gamers tend to make the very bad mistake of assuming that the people 'in charge' of big PUBLIC* gaming companies are there to make the best games possible. They're not. They're there to make the most money for their shareholders - that's where a director's duty lies - to the shareholder, to make the most money for them. They owe no legal duty to their customers (in this context at least) to make a 'good game'. They have to do certain things guaranteed by statute such as:

    1. Produce goods of meritable quality
    2. Produce goods that do what they are advertised to do, etc. amongst other things guaranteed by Trade Practices legislation

    But these don't translate into their literal meaning. They mean that they can't sell you a game that doesn't work at all under the system requirements that they specify and that they can't sell you a game with no multiplayer when they've been saying that their game actually does have multiplayer.

    So, do we want EA, a producer with a track record of producing sub standard and badly supported games buying up yet another game developer with a history of making good games? So that they can 'streamline their processes' (read: lower development cycles, lower staff working on them) and 'strategically decrease cost pools' (read: less support after launch). No. No, we don't.

    The only hope with regard to publicly owned gaming producers is that people who know their industry from a GAMER'S perspective retain jobs in the higher echelons of these huge companies. Blizzard was a case in point - although it was owned by Vivendi, the top tier of directors and managers all kept their jobs and were allowed the freedom to make good games. I just hope that continues after the merger.

    *Emphasis on public - 'public' meaning publicly listed with shareholders being the true owners of the company.

  • combatsoldier

    Posted Aug 19, 2008 3:12 am PT

    Im glad it ended the way it did. EA is a huge beast that is gobbling everything up.

  • spirit_obscura

    Posted Aug 19, 2008 2:50 am PT

    yeaa. Although I love EA, I hated this act that they were doing and I'm glad it expired

  • sivasiva

    Posted Aug 19, 2008 2:40 am PT

    Finally...

  • tatu2004

    Posted Aug 19, 2008 2:40 am PT

    a dream come true EA to back off was the right thing to do. my dream now is that R* will become bigger than EA in years to come.cross fingers everyone..