Remember Electronic Arts’s bid for Grand Theft Auto-maker Take-Two? The one the video game giant made in February? It’s still around!
In a masterful bit of corporate obfuscation, EA (ERTS) issued a press release this morning (reprinted below) that announced that:
- Take-Two (TTWO) has asked to “make a management presentation” to explain why it’s worth more than the $2 billion EA has offered.*
- EA is letting its $25.74 a share tender offer — the one it has been perpetually re-extending — expire tonight because it needs to “validate the assumptions” it made when it first made the bid.
- EA thinks it is too late to swallow up Take-Two in time for the upcoming holiday season.
- EA is, however, happy to let Take-Two management show it some Power Point decks.
Our translation: Zzzzz. Take-Two is still in play, and EA would still like to buy it. We’ve previously predicted that EA would walk away from the deal as soon as U.S. regulators sign off on it, and since that approval should come this week, we may still see that scenario play out. But as we read it, the letters and press releases are just formal declarations of bargaining positions: Take-Two wants the world to know it has other options besides EA; EA wants the world to know that it’s willing to drop the bid. In other words — nothing’s changed.
*A big thank you to Joystiq’s Justin McElroy for the remedial reading lesson. Serves us right to read press releases without consuming caffeine.
Press release follows:
On Friday August 15, John Riccitiello, Chief Executive Officer of EA, called Strauss Zelnick, Executive Chairman of the Board of Directors of Take-Two, to discuss EA’s offer to acquire Take-Two. Following discussions over the weekend between EA and Take-Two, EA accepted Take-Two’s offer to provide a management presentation to EA containing non-public information. The letters between the parties are set forth below.
EA also announced that it will allow its tender offer for all of the currently outstanding shares of common stock (including the associated preferred stock purchase rights) of Take-Two to expire on Monday, August 18, 2008 at 11:59 p.m., New York City time.
As previously reported, the Federal Trade Commission is scheduled to complete its antitrust review of the proposed transaction by August 21. EA remains confident that antitrust issues will not prevent or delay a transaction.
Below is the text of the letter sent today by Mr. Riccitiello to Mr. Zelnick:
August 18, 2008
Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
New York, NY 10012
Thank you for taking my call on Friday and for your response letter on August 17, 2008.
As discussed on Friday, 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, we are pleased to accept your offer to review your management presentation as outlined in your letter.
We continue to have great respect for Take-Two’s creative teams and products and are hopeful that we can work together to reach a mutually agreed transaction.
/s/ John Riccitiello
Chief Executive Officer
Below is the text of the letter sent yesterday by Mr. Zelnick to Mr. Riccitiello:
August 17, 2008
Mr. John S. Riccitiello
Chief Executive Officer
Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, CA 94065
Thank you for your recent expression of interest for Electronic Arts Inc. (“EA”) to participate in Take-Two Interactive Software, Inc.’s (the “Company”) formal process to evaluate the Company’s strategic alternatives. As you know, we have been willing to have EA participate in this process following the successful launch of GTA IV, and we are happy to include EA now.
As I mentioned when we spoke on Friday, our process begins with an in-depth management presentation. The Company has made significant strides since EA first expressed interest in the Company and this presentation includes material non-public information to which you would not otherwise have access, 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. I believe our presentation will enable you to understand better the value of our Company to EA.
Prior to the management presentation, we will only require EA to enter into a confidentiality agreement. The agreement would be limited to provisions required to comply with federal securities laws and to ensure the Company’s ability to protect the confidentiality of the information shared with you. I can assure you that this requirement is the same as or more favourable to EA than that which we have employed with all other participants in the process.
We understand that a number of months have passed since you first expressed interest in the Company and, accordingly, we will act quickly to assist you in moving through our process. Once we execute a confidentiality agreement, we are prepared to schedule the management presentation immediately.
With my best personal regards.
/s/ Strauss Zelnick
Executive Chairman of the Board
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