Investors flee after EA withdraws interest
With the prospects of a $2 billion acquisition by Electronic Arts gone, investors fled “Grand Theft Auto” publisher Take-Two Interactive on Monday, driving its stock down by 24%.
Other videogame companies such as Activision Blizzard and THQ, by comparison, dropped 4% and 6%, respectively, amid the overall market plunge Monday.
Take-Two stock has been trading in the mid-$20s ever since EA’s bid of $26 per share (later lowered to $25.74 per share) went public in late February. On Monday it closed at $16.57.
EA stock fell 4% to $43.30.
Now that EA is out of the picture, investors apparently think there is little chance that another potential suitor will step forward with a similar bid. Take-Two has said it is in private talks with other companies but has not disclosed who they are or how advanced any of the discussions are.
After initially being rejected by Strauss Zelnick and other Take-Two execs last winter, EA took its $2 billion bid directly to shareholders in a hostile tender offer. Very few shareholders accepted EA’s bid by August, however, at which point the “Madden NFL” publisher re-entered private discussions with Take-Two.
It wasn’t the only videogame company with tough financial news Monday: Sci Entertainment, the British publisher of “Tomb Raider” in which Time Warner has a 20% stake, reported a $178 million loss for the fiscal year that ended June 30, more than seven times as much as it lost in fiscal 2007.
Sci, which plans to change its corporate name to the better-known Eidos brand, has undergone a major re-organization and posted layoffs in the past year as it has reduced its focus to a few key brands such as “Tomb Raider” and “Just Cause.” It also is producing a new “Batman” game for next year.
Warner Bros. spent $30 million to double its stake in Sci to 20% in April and also signed a deal to distribute the company’s games in North America.