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EA’s take two on Take-Two

Company extends deadline on bid

It’s not game over yet for Electronic Arts’ $2 billion bid to acquire Take-Two Interactive.

On Friday, EA extended until May 16 the deadline for shareholders to accept its offer. It had been set to expire that day. As of Friday, only about 8% of Take-Two shares had been offered to EA at the $26 price.

EA slightly reduced its bid to $25.74 to reflect new shares being issued to ZelnickMedia, the consulting company that’s running Take-Two via executive chairman Strauss Zelnick and CEO Ben Feder, among other top execs.

Zelnick had previously said EA’s bid was the wrong price at the wrong time. EA’s extension eliminates the latter concern, since it goes well past the launch of “Grand Theft Auto IV” on April 29. Zelnick accused EA of trying to lowball Take-Two shareholders before the full value of the hugely anticipated game became apparent when it went on sale. It has since been assumed “GTA IV” will gross approximately $400 million worldwide in its first week (Daily Variety, April 16).

However, the Take-Two topper maintained his concern about price on Friday.

“Take-Two’s board of directors has maintained from the beginning, and continues to believe, that EA’s proposal vastly undervalues our company,” he said. “It undervalued the company at $26 per share, and it certainly undervalues Take-Two at $25.74.”

He also noted that at Take-Two’s annual meeting on Thursday, shareholders voted overwhelmingly to re-elect the board of directors and to approve their new compensation plan.

However, EA has objected to the stock grant that ZelnickMedia received, since only shareholders of record before Feb. 19 — five days before EA’s bid went public — were allowed to vote. Analysts estimate that more than half of the vidgame publisher’s shares have been sold since then as their price skyrocketed to just under $26 once the offer became known.

EA is apparently betting that a sizable number of the new shareholders won’t be happy about ZelnickMedia’s significant and widely criticized raise, or that at least 42% of them will sour on the company in the next month for other reasons.

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