EA Re-rolls DICE Deal

EA Holding AB Changes Condition of Its Offer to the Shareholders of Digital Illusions (thanks Frans) has what seems to be a follow-up on reports that EA's bid to acquire Swedish developer Digital Illusions CE (DICE) would be rejected (story). The story reports the acceptance period for the original offer has expired without EA getting their targeted percentage of the outstanding DICE stock, resulting in a change to the offer:
As a result, the offer has not yet been accepted to such an extent that EA has become the owner of more than 90% of the total number of shares representing more than 90 percent of the votes in DICE, which was a condition for the implementation for the offer.

EA today changes the condition above and conditions the offer upon an acceptance level through which EA would become the owner of more than 50% of the total number of shares representing more than 50% of the capital and votes in DICE after dilution upon exercise of employee warrants outstanding under the option program launched in 2002. As a consequence of this, the acceptance period is extended to January 20, 2005.
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Re: Awful syntax
Dec 20, 2004, 14:27
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Re: Awful syntax Dec 20, 2004, 14:27
Dec 20, 2004, 14:27
 
it takes some time to understand this sort of texts

It doesn't take much background at all to understand what they're talking about. Maybe if you've never had any exposure to stocks and stock options (esp. ESOs -- employee stock options), but it's pretty straight forward.

after dilution upon exercise of employee warrants outstanding under the option program launched in 2002

In 2002 DICE started/authorized an employee stock option plan. Options were granted to various employees under that plan. And, apparantly, the options were for brand new shares of stock that didn't actually exist previously -- so unless those options (warrants) are paid for (exercised) they don't exist. The creation of additional shares is known as dilution.

So what? Well, let's say there's 100,000 shares out there right now. Under this deal EA has to buy >50,000 of them. But if I have options for 10,000 shares and I exercise them then the total number of shares jumps to 110,000 -- it's diluted the pool. Under the wording above, EA now needs 55,000 -- they don't get to slide by with only 50k just because those shares didn't exist beforehand. If there's a ton of ESOs out there then this could make a huge difference in whether or not EA can reach the mark or not. What it really boils down to is that EA is going to have to offer DICE employees a nice tidy profit on their shares -- to make them want to exercise their options and then sell them to EA. Pretty standard. This is how employees get rich.

The 90% number was much better in the "getting rich" dept though... under the new deal they don't need nearly as many shares, so they don't have to give as much per share. If you're a DICE employee and think this is really going through, then sell now and get the hell out. Because you know you don't want to be there once EA takes over (which is probably why they couldn't reach the 90% plateau; that or EA was just being fucking cheap on the buyout. If the latter, it's not going to get better).

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 LOL