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EA Cans Take-Two Deal
About six months after the initial proposition, Electronic Arts said Sunday that it has terminated acquisition talks with Grand Theft Auto maker Take-Two.
A press statement from EA said the decision came following Take-Two's previously-announced management presentation and "review of other due diligence materials provided by [Take-Two]."
EA CEO John Riccitiello said, "EA is tracking toward a record breaking year. We're launching 15 new games including award-winners like Spore, Dead Space and Mirror's Edge, great new titles from the Sims, new family titles with Hasbro, and the highest quality slate of EA SPORTS titles on this generation of consoles.
"We're also expanding beyond our core business with a series of direct-to-consumer launches including Warhammer Online."
EA had extended the offering five times before entering friendly talks with Take-Two. Execs with Take-Two had repeatedly called EA's offer of $25.74 per share "inadequate."
Take-Two chair Strauss Zelnick responded, "We remain focused on creating value for our stockholders and our consumers. This has been our goal since EA launched its conditional and unsolicited bid six months ago, a bid which was repeatedly rejected by our stockholders.
"As part of that commitment, we remain actively engaged in discussions with other parties in the context of our formal process to consider strategic alternatives. We're especially proud of the success we've enjoyed over the past 18 months and we remain confident in our ability to generate value for stockholders."
Take-Two CEO Ben Feder added, "We are confident in the unique value of our business given our strong position in what is a growing and dynamic industry."
Games analysts were largely convinced that the deal would go through.
I got really close on this one...
Watch the lawsuits come in.
Maybe EA had a chance to sit down with Rockstar and did a little behind the scenes negotiating, promised more money, their own studio etc.
Either way EA wants/needs to acquire somebody and if its not T2 its Ubi which would be a better deal, but so far fetched. So maybe they cherry-pick T2 or spend wisely on smaller boutique developers, or pay big bucks in the east.
Wow, didn't see that one coming. I really thought EA would have pulled out a win in late innings. I'm sure T2 stock is going to sink a good chunk this week, as it seemed bloated based on their acquisition talks with EA. Now that it's done with, it's gotta hit its true value soon.
Either way, this back and forth was really entertaining, and I can't wait to see what happens next:)
It may be strategy or it could be something worse... but what would drive EA to walk away after they got to look under the hood???
Wow Lets see how the stock behaves on monday (i think it opens at 17 and if we get a bad tape thanks to our banking system it goes to 15). If it tanks and it was mere startegy then i would expect a lower EA bid later this year or next. If T2 thought their initial offer was low and opportunistic cant wait to see what they say next.
On the other hand if none of this pans out then i don't truly see another buyer for T2. none that would be willing to pay more anyways (Ubi may or may not have the cash, Activision cant absorb a big entity right now) a media conglomerate could step in sure but the lost synergies alone undermine a high bid.
So if no bids materialize, and the stock doesnt hold 20 i would imagine lawsuits would follow.
Or T2 holds...
On Friday 12 it opened at $20.90 and closed at $21.89. It should drop at least to $20.90 (all those who bought it at that price or higher will be the first to sell). I expect stock to close at the lower $20's or high $19's. A great number of stockholders were not selling to EA, even though their offer was almost 4 dollars more than the current price. I doubt they will sell now that the price will go even lower, this alone should prevent the price from going lower than the original $17 stock price when all started. However, if the stock reaches $17, I expect shareholders to either request new discussions with EA, or ask for the management to step down (similar to what happened with Eidos in January). It all depends on whether the shareholders think these possible suitors TakeTwo talks about exist or not. If they think they do not, stock would drop all week (January 23 is the 52-week lower point, $13.53).
EA is not likely to let TakeTwo be bought by another company like Activision. My guess is that EA hopes the poison pill TakeTwo implemented will prevent efforts from these mysterious "suitors" to merge or buy them until they make their next move (maybe buying the different divisions one by one, especially Rockstar and T2?)
(At 13 UTC pre-market stands at $15.40. This will really hurt :-/ The explosions of Lehman and Merrill Lynch could have influenced this, nobody wants to hold risky stock when huge banks are crumbling)