Take-Two rejects EA’s buyout bid and is open for higher offers

Pre-order Grand Theft Auto 4 for Xbox 360Grand Theft Auto publisher Take-Two Interactive last Wednesday told its shareholders to reject Electronic Arts’ $2 billion buyout bid, saying it’s not enough. Clearly Take-Two wants more money. But their rejection they say is meant to explore alternatives, even combining with EA or other third parties, to maximize its value for shareholders. The company wants to wait until after April 29th when Grand Theft Auto IV, the latest in the blockbuster series, hits store shelves. The game is by far Take-Two’s most popular and one of the best-selling franchises in the industry with some analysts expecting sales of up to 10 million this year alone!

EA Take-Two logoAfter being declined twice, the $26-per-share bid turned hostile March 13th, when EA took the offer directly to shareholders. Take-Two’s board had asked for 10 business days to think over the decision and that time ran out this Wednesday.

Yahoo biz reports that “Take-Two took several steps to prevent EA from going through with a hostile takeover. It adopted a 180-day shareholders’ rights agreement, also known as a ‘poison pill.’ It kicks in if an outsider acquires 20% of Take-Two’s shares or if an existing shareholder who already owns this much buys another 2%.”

Take-Two Chairman Strauss Zelnick said the rights 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.” Take-Two’s shares have briefly climbed above $26 (up from $16 last month) in recent weeks after the offer became public, but analysts are not expecting the offer to go much higher. The company said it has received other “indications of interest” since EA’s offer became public last month, but there haven’t been any “substantive discussions.” The only likely companies with a large enough war chest to bid higher might be Ubisoft, Sony or Microsoft.

Take-Two said it is willing to start preliminary talks, including with EA, before April 29 under confidentiality agreements. As for what analysts are thinking… Wedbush Morgan’s Michael Pachter has called Take-Two’s rejection a mistake, firmly stating the publisher has “virtually no chance of finding a better offer” considering that the company “has consistently lost money for the last two years.” So much for EA’s tender offer eh?

Picture courtesy of PCworld