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Take-Two urges stockholders not to sell to Electronic Arts

by Glenn Chapman Thu Mar 27, 1:12 AM ET

SAN FRANCISCO (AFP) - Take-Two Interactive urged shareholders Wednesday to reject a bid by the world's biggest videogame maker Electronic Arts, which is bent on capturing hit games "Grand Theft Auto" and "Bioshock." ADVERTISEMENT

EA made its offer to Take-Two stockholders after the company's board of directors rejected its offer in February as too low given the firm's blockbuster titles and ownership of hot video game creator Rockstar Games.

"Our stockholders' interests would hardly be served by accepting an offer from EA at the wrong price and the wrong time," Take-Two board of directors chairman Strauss Zelnick said in a statement.

"As a result, the board recommends that stockholders not tender any of their shares to EA."

Take-Two stock was trading near the 17-dollar-per-share mark when EA made its original offer of 26 dollars per share to the board of directors. The offer is valued at 2.0 billion dollars (1.28 billion euros).

"It is regrettable for stockholders that Take-Two's board of directors has not accepted EA's offer," the California company said in a written response to an AFP inquiry.

"EA believes that a combination of EA and Take-Two is in the best business interest of all parties."

EA said its all-cash offer is "full and fair, and reflects the value of Take-Two's intellectual properties, talent, and operational progress."

Take-Two shares rose 0.35 percent Wednesday to 25.91 dollars while EA fell 1.4 percent to 49.46 dollars.

Take-Two's board is enacting a series of measures to thwart what it sees as a hostile takeover bid by EA.

Board members created a new series of preferred stock and delayed its annual stockholders meeting to April 17, gaining time to devise a plan to appease investors in favor of the EA offer and avoid being ousted in an EA coup.

Take-Two said it is exploring possible mergers or alliances with other companies and "financial alternatives that could deliver higher stockholder value than the current EA offer."

Take-Two says it is open to discussing options with "any parties," including EA, after Grand Theft Auto IV is released in late April.

The release of the latest GTA title was delayed from last year, disappointing fans and investors.

GTA is one of the most popular computer games on the market, but also among the most controversial because of its violent nature. Players score points with acts such as carjacking and killing prostitutes or police officers.

"GTA:4" has received positive advance reviews and is expected to be a sales blockbuster. EA argues that enthusiasm over the game was already factored into the stock price by the time EA made its offer, which expires April 11.

EA wants to acquire Take-Two and its lucrative titles in time for the year-end holiday shopping season.

"For the life of us, we can't figure why this would be the wrong time to talk about our offer," EA spokesman Jeff Brown told AFP in an interview earlier this month.

"Our timing is driven by the idea that the value of this asset erodes significantly with time. If we sign a deal by spring or summer and publish their titles by holiday 2008, it is very valuable."

Take-Two contends the offer does not properly value the company's game makers and painfully restructured management.

Take-Two has gone through a half-dozen chief executives, with the most recent executive put in that post a year ago by stockholders upset by the firm's legal and financial woes.

Rockstar title "Manhunt 2" earned notoriety last year by being banned in Britain, Ireland and Italy and yanked from shelves of a major retail chain in the United States, where it got a damning "adults-only rating."

The makers of the game featuring blood-spattered scenes in an asylum won an appeal against British censors that said it demonstrated "casual sadism" and an "unrelenting focus on stalking and brutal slaying".

Take-Two's freshly released "Bioshock" title featuring morally-disturbing choices and genetic weaponry has been heaped with awards and praise from gamers, promising to be another hit for the company.