Take-Two Interactive Software Inc. shareholders on Thursday re-elected its current Board of Directors, showing its support for the current Board and the shareholders’ willingness to oppose the takeover efforts of Electronic Arts. Rival EA has been pursuing Take-Two in an unfriendly takeover offer, with its current bid of $2 billion.
EA originally proposed its buyout to Take-Two’s Board, which was rejected. EA then took its offer of $26/share directly to Take-Two’s shareholders in the form of a tender offer, which expires on April 18th at midnight. This shareholder meeting was not typical, however, because analysts estimated that as much as 70 percent of Take-Two’s shares had changed hands since EA made its tender offer public on February 24th, and that these new shareholders were unable to participate in the shareholder meeting because they had missed the February 19th ownership cutoff date which was required to participate.
EA blasted the shareholder vote and indicated that it was not reflective of the new shareholders’ point of view. Analysts, however, indicated that EA did not have the required 50 percent of shares tendered, even with the new shareholders, to assume control of Take-Two. EA is now in the position that it must either increase its offer or just walk away.
Take-Two feels it has the upper hand, in that its new Grand Theft Auto IV video game has not yet been released, and when it is the sales of the game will be huge, thus increasing the value of the company overall and its shares beyond the $26/share current value. The fourth video game in the Grand Theft Auto Series is due out April 29th. So far, it has received rave reviews and is poised to break sales records; it is projected to bring in $400 million during just its first week of sales. If things proceed as predicted, the launch of this game will be the biggest opening week ever for any entertainment product.