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EA Looks to Take Take-Two

Electronic Arts has announced they are looking to buy Take-Two Interactive for a whopping 2 billion dollars. The article offers the text of a letter sent to Take-Two from EA Chief Executive Officer John Riccitiello describing the all-cash offer that has been rejected by Take-Two. EA is now making this public in the hopes that Take-Two shareholders will find it appealing and exert pressure on the board to accept it. Here's a summary:

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Electronic Arts Inc. (EA) (NASDAQ: ERTS - News) today announced that it has proposed to acquire Take-Two Interactive Software, Inc. (Take-Two) (NASDAQ: TTWO - News) in an all-cash merger valued at approximately $2.0 billion.

EAs proposal of $26 per share in cash represents a premium of 64 percent over Take-Twos closing stock price on Feb. 15th, the last trading day before EA sent its revised proposal to Take-Two, and a 63 percent premium over Take-Twos 30-day trailing average price over the thirty trading days ending on that date.

EAs proposal was contained in a letter sent on Feb. 19th by EA Chief Executive Officer John Riccitiello to Strauss Zelnick, Executive Chairman of the Board of Directors of Take-Two. The Take-Two Boards subsequent rejection of the EA proposal led to EAs decision to release the letter and bring its proposal to the attention of all Take-Two shareholders.

Mr. Riccitiello said today: 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-Twos game designers would also benefit from EAs financial resources, stable, game-focused management team, and strong global publishing capabilities.

The EA letter warned that further Take-Two delay in accepting EAs proposal could prevent Take-Twos shareholders and other constituents from realizing its benefits. There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today, Mr. Riccitiello wrote. The letter added that timely completion of the proposed transaction would allow EAs strong publishing and distribution network to positively impact the ongoing post-launch sales of GTA IV and support the new Take-Two titles scheduled for launch later in the year and during the holiday selling season.

As noted in EAs Feb. 19th letter, EAs proposal is not conditioned on any financing requirement. It is, however, subject to certain customary conditions as set forth in the letter. EAs $26 per share proposal is based on the current equity capitalization of Take-Two. Although EA indicated in the letter that its proposal was subject to negotiations commencing by Feb. 22nd, EA intends to keep its proposal open for the present to give Take-Twos shareholders and Board of Directors further time to consider it.

15. No subject Feb 24, 2008, 17:41 tootbrush
I see some upsides to this merger. Doesn't EA own Alpha Centauri and System Shock? Firaxis and Irrational 2K Boston (I hope EA re-renames them) would be reunited with those IPs if this merger happened.

On another note, this merger doesn't bother me at all. EA hasn't been so bad lately and T2/2K doesn't have any games I'm really interested in. The only people losing with this deal are the 2K Sports fans :p

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