Every week on Inside Xbox, Nelson & Natalie recommend a game for you to Pick Up & Play!
Download new episodes every Monday on Inside Xbox!
Recent Reviews
Review: Bionic Commando: Rearmed
If you ever had the opportunity to play the original Bionic Commando on the NES in 1988, you know how painfully difficult the game can be. You probably could have fed everyone in the world if you had a nickel for every time you cursed Capcom’s name.... - Read the full review
Once again, Take-Two is trying to remind Electronic Arts that No means No. After a failed takeover bid in February, followed by a second attempt in which EA went directly to the T2 stockholders, Take-Two has issued an official statement to their shareholders that EA's offer of $26 per share is inadequate, and that the company is looking to capitalize on the launch of Grand Theft Auto IV in order to make more money. Uh, duh?
It's not all bad news for EA, though. Take-Two has announced that following the launch of Grand Theft Auto IV, the company will review "strategic alternatives" that might let both companies profit while still remaining indepdendent. Is it possible that Take-Two is planning to let EA invest in some of their titles? What does this mean for the 2K Sports games? Looks like we won't know more until the end of April, at the earliest.
Take-Two's press release is included after the jump.
TAKE-TWO INTERACTIVE SOFTWARE BOARD REJECTS ELECTRONIC ARTS' OFFER AS INADEQUATE
Recommends Stockholders Not Tender Shares at $26 a Share
Company to Begin a Review of Strategic Alternatives After Release of
Grand Theft Auto IV
Company's Presentation at Bank of America Conference on March 26th at 2:40 pm ET to be Webcast
New
York, NY— March 26, 2008 —The Board of Directors of Take-Two
Interactive Software, Inc. (NASDAQ:TTWO) today announced that it has
thoroughly reviewed Electronic Arts Inc.'s (NASDAQ: ERTS; "EA")
unsolicited conditional tender offer with the assistance of its
financial and legal advisors and unanimously determined that the $26.00
per share cash offer is inadequate in multiple respects and contrary to
the best interests of Take-Two's stockholders. Accordingly, the Board
recommends that stockholders not tender any of their shares to EA. The
basis for the Board's unanimous decision is set forth in Take-Two's
Schedule 14D-9 filed today with the Securities and Exchange Commission.
Take-Two also announced today the following actions:
Filed a Solicitation / Recommendation Statement on Schedule 14D-9 with
the SEC containing the Board's unanimous recommendation that
stockholders reject Electronic Arts Inc.'s offer of $26.00 net per
share in cash as being inadequate and not in the best interests of
stockholders
Filed a supplement to the proxy statement with the SEC to moot any
claims alleged in a class action lawsuit that the proxy statement was
misleading and incomplete
Adopted a stockholders rights agreement and a Certificate of
Designation for a new class of Series B Preferred Stock. The rights
agreement will be outstanding for 180 days
Changed the date and time of the 2008 Annual Meeting to Thursday, April 17, 2008 at 6:30 p.m. (New York City time)
Amended Bylaws to provide for a new extended period of time for
stockholders to nominate persons for election to the Board and propose
business to be considered at the 2008 Annual Meeting
Amended employment agreements with Lainie Goldstein (CFO), Seth Krauss (EVP and General Counsel) and Gary Dale (EVP)
Participation in investor presentations, including the Bank of America 2008 Smid Cap Conference
Suspended the acceleration of outstanding restricted stock awards under
the Company's Incentive Stock Plan until such time that, among other
things, payment is accepted for more than 50% of the Company's then
outstanding shares in a tender offer
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.
Strauss Zelnick, Chairman of the Board of Take-Two, commented,
"Take-Two's Board of Directors and senior management team were put in
place less than one year ago with one mandate: maximize stockholder
value. We have maintained a single-minded focus on that goal ever since
and it remains the guiding principle in every decision we make with
regard to Take-Two. Our Board, after careful review, has unanimously
determined that Electronic Arts' offer continues to provide
insufficient value and remains opportunistically timed to capture the
value of the upcoming Grand Theft Auto IV launch at the expense of our
stockholders."
"With one of the strongest portfolios of intellectual property in our
business, a superb creative and business team, and a revitalization
plan that is beginning to deliver results, Take-Two is uniquely
positioned to create stockholder value in an industry that is enjoying
the highest growth rates of any entertainment medium. We are
effectively working toward a process to review all available options to
maximize this value, either as an independent company or in combination
with a third party, and are open to beginning informal discussions
starting now. Our stockholders' interests would hardly be served by
accepting an offer from EA at the wrong price and the wrong time. As a
result, the Board recommends that stockholders not tender any of their
shares to EA."
Mr. Zelnick will be presenting at the Bank of America 2008 Smid Cap
Conference on March 26, 2008 at 2:40 pm Eastern Time. To listen to the
audio portion of the presentation live, log onto
http://ir.take2games.com. A replay of the presentation will be archived
and available following the presentation at the same location.
Reasons for the Board's Recommendation
In arriving at its decision, the Board of Directors considered numerous factors, including but not limited to the following:
· EA's Offer price is inadequate and substantially undervalues the
Company. The Board of Directors has determined that the EA Offer price
is inadequate and substantially undervalues the Company's established
position in the interactive entertainment software market, robust and
enviable stable of game franchises, extensive portfolio of owned
intellectual property, creative talent, strong consumer loyalty and a
growing sports business. In particular, the EA Offer does not
adequately compensate stockholders for the Company's valuable
franchises, which include more than 20 brands (in addition to Grand
Theft Auto) that have sold one million or more units each, of which
more than half are internally owned and developed and therefore deliver
higher profit margins than licensed products.
· The Company's financial advisors, Bear Stearns and Lehman Brothers,
have each delivered an opinion stating that, as of the date of such
opinion, the EA Offer price was inadequate, from a financial point of
view, to the stockholders of the Company.
· The Company's directors and executive officers believe that the EA
Offer price is inadequate and do not intend to tender their Shares.
· The Board of Directors is committed to exploring strategic
alternatives to maximize stockholder value and may be able to find a
better alternative to the EA Offer. After the Company's release of
Grand Theft Auto IV, scheduled for April 29, 2008, the Board of
Directors is committed to exploring alternatives to maximize
stockholder value, which may include a business combination of the
Company with third parties or with EA, remaining independent, or other
strategic or financial alternatives, that could deliver higher
stockholder value than the EA Offer. 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 with respect thereto
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 (not in the Company's view amounting to
negotiations) with interested parties, including EA. The Board of
Directors believes that tendering Shares into the EA Offer before the
Board of Directors and its advisors have had the opportunity fully to
explore alternatives to the EA Offer could preclude its ability to
effect an alternative transaction that could provide superior value to
the Company's stockholders.
· The timing of the EA Offer is opportunistic. The EA Offer is
opportunistic and has been timed to take advantage of the upcoming
release of Grand Theft Auto IV, one of the most valuable and durable
franchises in the interactive entertainment software industry and the
Company's biggest selling and most profitable franchise. EA launched an
unsolicited bid for the Company even though the Company had extended an
offer to negotiate with EA immediately following the release of Grand
Theft Auto IV and, subject to the fiduciary duties of the Board of
Directors, offered not to negotiate with any other third parties in the
interim without first contacting EA. The Board of Directors believes
the full commercial potential of the game will not be evident until
after its release, and that the EA Offer was timed to capture the value
of that anticipated commercial success at the expense of the Company's
stockholders.
· The EA Offer does not reflect progress in the Company's
revitalization efforts. The Offer price does not reflect the
significant progress the Company has made in its revitalization efforts
since June 2007, including the implementation of a more streamlined and
efficient operating structure, a cost cutting initiative that is
expected to achieve annualized savings of at least $25 million and a
more disciplined product investment review process. Benefits of the
revitalization plan have yet to be recognized fully in either the
current stock price or in the Offer price.
· The EA Offer does not reflect the Company's potential synergy value
that a proposed combination with EA would create. The EA Offer does not
compensate the Company for the significant potential synergy value that
the proposed combination would create. EA has been unwilling to
estimate publicly the synergy potential but has acknowledged that there
is significant synergy potential. Potential synergies related to a
proposed combination include: realizing a sales uplift as a result of a
broader reach of distribution infrastructure; leveraging investments in
online, wireless and other evolving platforms; optimizing sports
offerings; and reducing sales, general and administrative costs
significantly. Certain equity research analysts concur with this point
of view and have estimated that EA would realize approximately $50
million to $210 million in synergies per year following completion of a
transaction.
· The EA Offer does not properly reflect the Company's business,
financial condition, current business strategy and future prospects.
The Board of Directors believes that management's and the Board of
Directors' understanding of and familiarity with the Company's
business, financial condition, current business strategy and future
prospects has not been fully reflected in the Company's results of
operations or Share price. The Company's management and Board of
Directors remain entirely focused on generating the maximum value for
stockholders. Stockholders elected new senior management and members of
the Board of Directors less than one year ago because of this team's
commitment to, and track record of, creating stockholder value, and
industry experience. The Board of Directors believes that the Company's
senior management will be able to create stockholder value meaningfully
in excess of the EA Offer price through the continued execution of the
Company's current revitalization plan and business strategy.
· The consideration offered by EA is taxable. The consideration offered
by EA would in general be taxable to the Company's stockholders.
· The Offer is highly conditional, which results in significant uncertainty that the Offer will be consummated.
Stockholders Rights Agreement
Take-Two also announced today that its Board of Directors has adopted a
Stockholders Rights Agreement to protect stockholders against, among
other things, unsolicited attempts to acquire control of the Company at
an inadequate price for all stockholders or are otherwise not in the
best interests of Take-Two and its stockholders. The Stockholders
Rights Agreement has been adopted in response to EA's unsolicited
tender offer to acquire all of Take-Two's outstanding shares of common
stock for $26.00 per share in cash. The Board of Directors has
committed to redeem the Rights distributed pursuant to the Rights
Agreement 180 days after adoption of the Agreement.
Under the Stockholders Rights Agreement, the rights will become
exercisable if a person becomes an "acquiring person" by acquiring 20%
or more of the common stock of Take-Two or if a person commences a
tender offer that could result in that person owning 20% or more of the
common stock of Take-Two. The Stockholders Rights Agreement will not
apply to existing stockholders who own 20% or more of Take-Two's
existing common stock, unless and until they acquire an additional 2%
of Take-Two's outstanding common stock.
Mr. Zelnick commented, "We have adopted this short-term Stockholders
Rights Agreement in order to guard against a takeover by EA at the
current, inadequate price. We believe the Rights Agreement will ensure
that the Take-Two Board has adequate time to consider all strategic
alternatives for maximizing value for Take-Two stockholders. The
Agreement will not, and is not intended to, prevent a takeover of the
Company on terms that are fair to and in the best interests of all
stockholders."
Amendment to the Amended and Restated By-Laws of the Company
Take-Two also filed with the SEC on a Form 8-K dated March 26, 2008 an
amendment to the by-laws of the Company. Specifically, the Board of
Directors amended the by-laws of the Company to provide for a new
period of time for stockholders to be able to nominate persons for
election to the Board of Directors or to propose any business to be
considered at the upcoming Annual Meeting. The period of time begins
with the public announcement of the amendment to the by-laws and ends
on April 15, 2008. To extend the period of time, the date of the Annual
Meeting has been postponed from April 10, 2008 to April 17, 2008.
Further, in addition to stockholders of record on the record date (who
currently are entitled to put forth a nomination or proposal), the
Company will accept nominations and proposals from any person who was a
stockholder of record or beneficial owner of Shares at any time between
the record date and April 15, 2008. Finally, if a stockholder of the
Company provides notice that it requires additional time to nominate
persons for election to the Board of Directors or to propose business
to be considered at the Annual Meeting, the Board of Directors will
consider in good faith a request to adjourn the Annual Meeting for a
reasonable period of time, not to exceed 30 days. The by-law amendment
became effective immediately upon its approval by the Board of
Directors.
Bear Stearns and Lehman Brothers are acting as financial advisors to Take-Two and Proskauer Rose LLP is acting as legal advisor.
For more information, please visit www.taketwovalue.com.
About Take-Two Interactive Software
Headquartered in New York City, Take-Two Interactive Software, Inc. is
a global developer, marketer, distributor and publisher of interactive
entertainment software games for the PC, PLAYSTATION®3 and
PlayStation®2 computer entertainment systems, PSP®
(PlayStation®Portable) system, Xbox 360® and Xbox® video game and
entertainment systems from Microsoft, Wii™, Nintendo GameCube™,
Nintendo DS™ and Game Boy® Advance. The Company publishes and develops
products through its wholly owned labels Rockstar Games, 2K Games, 2K
Sports and 2K Play, and distributes software, hardware and accessories
in North America through its Jack of All Games subsidiary. Take-Two's
common stock is publicly traded on NASDAQ under the symbol TTWO. For
more corporate and product information please visit our website at
www.take2games.com.
Review: Bionic Commando: Rearmed
If you ever had the opportunity to play the original Bionic Commando on the NES in 1988, you know how painfully difficult the game can be. You probably could have fed everyone in the world if you had a nickel for every time you cursed Capcom’s name.... - Read the full review
TrackBack URI for this entry
Subscribe to this comment's feed
