EA Games make bid to buy Take Two

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Just saw this posted and had to put it here. EA had their previous bid of $25 per share rejected by Take and now EA have upped their offer to $26 a share which will total cost around $2 billion

Here's the whole letter that was sent from EA which now has to be made public becuase of the previous offer being rejected

Electronic Arts just called me to let me know that they are making a bid to acquire Take-Two Interactive in an all-cash merger of about $2 billion.

The offer set Take-Two's stock at $26 per a share, about 64 percent over the company's closing stock price prior to the company's Feb. 15 offer.

Take-Two's board rejected the offer, leading Electronic Arts to make their offer public to the company's shareholders.

In the letter, attached in the jump, EA CEO John Riccitiello tells Take-Two's Stauss Zelnick that the buy-out would help both the company and its stock holders:

Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Two's game designers would also benefit from EA's financial resources, stable, game-focused management team, and strong global publishing capabilities.\ ... There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today.
Specifically, the letter mentions that EA could really help out with the launch of GTA IV. Hit the jump for the full letter and check back later to read our interview with Riccitiello.
February 19, 2008

Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012

Dear Strauss:

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.'s ("EA's") $25 per share cash offer to acquire Take-Two Interactive Software, Inc. ("Take-Two") and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA's offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Our revised all-cash offer represents a 64% premium over Take-Two's most recent closing price and a 63% premium over Take-Two's 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.

We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Two's creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Two's talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best - create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Two's studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

We believe that Take-Two's shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

We also believe that any delay in this proposed transaction works against the interest of Take-Two's shareholders, because:

-- There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA's strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year's holiday selling season.

-- We believe Take-Two's current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

-- With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.

We also believe the transaction we are proposing will create value for EA's shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Two's and EA's corporate and publishing infrastructures and by optimally supporting Take-Two's creative teams and intellectual properties in EA's decentralized label structure.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two's shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two's shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22.

http://kotaku.com/360123/ea-makes-offer-to-buy-take-2
 
is this good for us or bad ?
 
this will be so bad if it happens, ea`s quantity over quality attitude does not bode well, i think this may be in responce of the activision/blizzard tie up. this may be a sign of things to come as developers are bought up by the larger developers to try and monopolies the major franchises and make them multiformat titles, thus making as much money as possible.
 
this will be so bad if it happens, ea`s quantity over quality attitude does not bode well, i think this may be in responce of the activision/blizzard tie up. this may be a sign of things to come as developers are bought up by the larger developers to try and monopolies the major franchises and make them multiformat titles, thus making as much money as possible.

To be fair EA's CEO John Riccitiello admitted publicly at this years GDC about the mistakes EA has made in the past regards acquiring other publishers/developers and the quality over quantity issue. They seem to have realized the mistakes they made in terms of managing companies like Westwood, Origin etc. that they took over as well as churning out game after game without any regard to quality.

Since purchasing Pandemic and Bioware they seem to have changed their attitude. Ofcourse they have a lot to prove still and we will have to wait and see, but maybe they shouldd get the benefit of the doubt. However I do think that it's not good to see them take over company after company especially someone as big as Take 2.
 
Ofcourse they have a lot to prove still and we will have to wait and see, but maybe they shouldd get the benefit of the doubt.

i`ll believe it when i see it moogle.
 
There's been talk of Take 2 being bought for ages though. Microsoft were apprently quite keen but now they've got their sites on Epic games.

I really don't like EA as a company. They do churn so many games out year after year that are hardly any different but with a new £50 price tag. At the same time i feel like Activision are going the same way with Guitar Hero for example.

Appartently when they don't have a mjor release on the way like GTAIV, Shares are very low and the publisher are losing alot of money and are in finanical trouble. I certinly don't want to see that happen.

The biggest shame i find is that as we go on, there are so few 3rd party exclusives that a consoles Big hitters are replying on their 1st party games
 
I don't like EAs perennial incremental upgrades to their sports franchises, that's why I only consider buying them every-other year - and only if the metacritc comments are favourable. If everyone had done the same, perhaps they would have addressed their 'game quality' issue some time ago...
 
It would seem that the second offer was also refused. Pretty much seems like Take Two are not interested.

EA was apparently going to kill of 2K games though (their competetion) who are under the Take Two banner which would probaby lead to lots of Layoffs
 
I hope they don't, I refuse to buy EA games anymore, even if they are good as they don't deserve the money for the countless crap orts and games they make and their inablitly to pay for descent servers online.
 
Does anyone else find the slogan "Its in the GAME!" drives them INSANE??!!
 

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