Los Angeles Times
reports that Take-Two Interactive has been hit with a
lawsuit brought by a shareholder who feels that Take-Two management deliberately
concealed a takeover bid by Activision (story
). On a related
Biggest Take-Two Shareholders Slash Stakes
has word that some shareholders
have decided to sell as shares rise on takeover news. Here's a bit on the
A Take-Two spokesman declined to discuss the suit in detail.
"We believe the claim lacks merit, and we intend to defend vigorously against
the litigation," the New York-based company said in a statement.
The lawsuit, filed by Prickett, Jones & Elliott on behalf of Take-Two
shareholder Patrick Solomon, alleges that the company's board rejected an
undisclosed acquisition offer from EA and then acted to increase what its
executives would be paid if the company were sold. The suit names Take-Two
Executive Chairman Strauss Zelnick and Chief Executive Benjamin Feder, who are
partners of investment company ZelnickMedia, which led a boardroom coup in March
2007 that wrested control of the video game company.
The suit spotlights the board's decision Feb. 15 to increase ZelnickMedia's
management fees and bonuses to what it calls "an exorbitant" $16.5 million, from
$3.8 million, in the event the company were sold. The suit also questions a
provision, up for a shareholder vote at next month's annual meeting, that would
grant ZelnickMedia 780,000 shares if the company were sold before March 31,
2009, and 1.5 million shares if it were sold after that date. At $26 a share,
that stock grant would be worth $20 million to $39 million, depending on when
the transaction closed.