Electronic Arts Inc. turned up the heat Thursday on its $2-billion buyout offer for Take-Two Interactive Software Inc., taking its cash offer directly to Take-Two's shareholders after the company's board rejected the bid as insufficient.
EA's effort to do an end run around Take-Two's management came after months of frustrated negotiations to buy the New York company, which publishes video games such as "BioShock," "Civilization" and "Grand Theft Auto," a franchise that has racked up more than $3 billion in sales in the last 10 years.
"The tender offer is an opportunity for Take-Two's shareholders to have their own vote as to whether the transaction makes sense," EA Chief Executive John Riccitiello said in an interview.
EA said it would pay $26 for each share of Take-Two, a 64% premium over the stock's closing price Feb. 19, the day EA made its formal bid to Take-Two's board. The offer expires April 11, a day after Take-Two's annual meeting is scheduled to take place.
Take-Two's board has told shareholders it would review the bid and make a recommendation by March 27. Company executives have declined to comment on the tender offer.
"We think the company is worth far more than what they're offering," said a senior Take-Two executive, who asked not to be identified.
"EA is trying to steal the company."
In an e-mail to Take-Two employees sent hours after EA announced its offer to shareholders, Take-Two Chief Executive Ben Feder and Chairman Strauss Zelnick wrote, "While today's news means EA is moving forward with its offer, an acquisition by EA is by no means a certainty."
Zelnick, who commandeered Take-Two last year in a boardroom coup, has twice turned down takeover bids from Riccitiello, a $25-a-share offer Feb. 15 and the $26-a-share bid Feb. 22. After the board rejected the second bid, Zelnick offered to meet with EA on April 30, the day after Take-Two is scheduled to ship its highly anticipated "Grand Theft Auto IV" game.
Instead of waiting, EA made its proposal public Feb. 24 in hopes of swaying shareholders to pressure Take-Two's management to come to the table sooner. Take-Two's stock had been trading around $17 in the preceding weeks but shot past $26 in the days after the EA announcement. Since then, however, its shares have drifted below the offer price as major stockholders took immediate profits by selling millions of shares at the higher prices.
