Videogame publisher takes bid to shareholders

With Take-Two Interactive’s board refusing to budge in its opposition to the deal, Electronic Arts has turned its $2 billion acquisition offer hostile.

World’s biggest videogame publisher on Thursday took its bid directly to shareholders of the “Grand Theft Auto” publisher, offering them $26 per share. Move was widely expected since EA revealed its offer to the public last month and Take-Two’s board, led by executive chairman Strauss Zelnick, rejected it as too low.

EA topper John Riccitiello has noted that EA’s bid represents a 64% premium over the last day of trading before it was first made and argued that his company could better market and sell Take-Two’s properties while still allowing its development teams, such as Rockstar Games, to operate independently.

Zelnick has countered that the deal’s timing is wrong and that $2 billion is insufficient given the progress he and CEO Ben Feder have made since taking over the financially troubled company last year. Though Take-Two has continued to lose money, its share value has significantly increased, and next month’s “Grand Theft Auto IV” is expected to be hugely successful.

Since EA made its bid, Take-Two stock has shot up and remained around $25.

In a sign they think it won’t go higher, two of the publisher’s biggest mutual fund shareholders have sold off most of their stakes in recent weeks.

There haven’t been any other indications as to whether Take-Two shareholders will accept EA’s tender offer. Deal is contingent on EA being able to acquire a majority of Take-Two’s stock.

Take-Two issued a carefully worded statement Thursday urging shareholders to “take no action” as it consults with independent financial and legal advisers. It will issue a response to EA within 10 days. Given the board’s past statements, it seems likely that it will continue to oppose the deal.

Take-Two stock closed up 3% on Thursday at $25.64.

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