Take-Two’s board of directors has finished evaluating EA’s most recent offer of 26 dollars per share and wound up much where they started — recommending again to shareholders that they hold onto their stock, and for pretty much the same reasons.
However, they’re not leaving out the possibility of a merger, with EA or any other interested parties, provided it occurs after the April 29th release of Grand Theft Auto IV:
The Board also confirmed that it will explore alternatives to maximize value for stockholders, which may include a business combination with third parties or with EA, remaining independent, or other strategic or financial alternatives that could deliver higher stockholder value than the current EA offer.
The Board has commenced a process for considering strategic alternatives in order to be prepared to engage in discussions with any parties, including EA, interested in a strategic business combination following Take-Two’s release of Grand Theft Auto IV, scheduled for April 29, 2008. The Board continues to believe that the Company will be best positioned, from the perspective of both value and timing, to conduct such a review at that time.
The Company has received indications of interest from third parties with respect to possible business combination transactions involving the Company since EA’s announcement, but no substantive discussions have yet occurred. To facilitate its efforts to explore alternatives to maximize stockholder value, the Company has begun to assemble the materials necessary for interested parties to conduct due diligence. Prior to the release of Grand Theft Auto IV, the Company is willing to enter into confidentiality agreements on customary terms and to engage in preliminary conversations with interested parties, including EA.
In the meantime, the publisher has instituted both a stockholders rights agreement and a Change in Control employee severance plan, both of which are designed to maximize costs another party would incur in a hostile takeover attempt.
While we at GameCyte believe any combination of Take-Two and EA is a bad idea simply because of the licensed sports game monopoly it would practically afford, Wedbush Morgan Securities analyst Michael Pachter doesn’t agree. He thinks Take-Two is making a mistake, and prefers to call consumer’s potential lack of sports game choice “synergy”:
We think that the Board has virtually no chance of finding a better offer. The EA offer has been public for 31 days, and we believe the company is not in discussions with any other party. This deal, in our opinion, makes more sense for EA than for any other company, primarily because of the synergies from consolidation of the two companies’ sports businesses. No other company is in the position to realize those synergies, which we believe are substantial.
Pachter believes that either EA will receive a majority of Take-Two shares through a tender offer, or they will withdraw and Take-Two stock will decline by one-fifth as a result.
Meanwhile CNET’s Daniel Terdiman is tired of the whole affair, but managed to get what may be EA’s final words on the deal:
“It is regrettable for stockholders that Take-Two’s board of directors has not accepted EA’s offer. EA believes that a combination of EA and Take-Two is in the best business interest of all parties.”
“EA’s offer price of $26 per share is full and fair, and reflects the value of Take-Two’s intellectual properties, talent, and operational progress. EA’s all-cash, tender offer commenced on March 13 is the most certain way to create stockholder value, and represents a 64 percent premium over Take-Two’s closing stock price on February 15, the last trading day before EA sent its revised proposal to Take-Two.”
“EA’s tender offer is a clear process for Take-Two stockholders to maximize the value of their investment. By advising its stockholders to reject the offer, Take-Two’s board is exposing them to further delays which may reduce the value and the certainty of a potential transaction.”
“EA’s tender offer is currently scheduled to expire on April 11, 2008.”
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