Take-Two Interactive chairman Strauss Zelnick has stated that the company’s actions to avoid a hostile takeover from Electronic Arts before the release of Grand Theft Auto IV have been vindicated, following a surge in the publisher’s share prices.
“The critical and consumer response to Grand Theft Auto IV vindicates our strategy of waiting until the launch with regard to E.A.’s offer,” said Zelnick in a New York Times interview.
At close of trading on Thursday, Take-Two’s share price stood at $26.09 - higher than that of Electronic Arts’ most recent offer of $25.74 per share. The share price has been slowly falling in the aftermath of Grand Theft Auto IV’s release, though, from a high close to $27.
Take-Two’s board of directors have always maintained that no significant takeover or merger talks will take place until after the release of Rockstar Games’ latest blockbuster. However, Zelnick’s latest comments give no clue as to when and if discussions with Electronic Arts might take a less antagonistic tone.
In the same The New York Times report, Electronic Arts spokesman Jeff Brown indicates that the share price increase “doesn’t change anything”. “We knew the game would be an extraordinary success,” said Brown. “All of that was factored into our offer of $2 billion.”
The true test will be seen in the next couple of weeks as this deal hits a breaking point (currently May 18th) if EA doesn't get enough shares tendered to its offer, and decides to pull out. The only reason this stock price has maintained its value is because EA priced the premium, but the premium is arguably only that valuable to EA. Without the publishing muscle of EA, GTA might be nice, but what would any prospective buyer do with the rest of their franchises; the ones that don't sell themselves? So if EA did pull out, what will happen to the stock? Its likely to tumble as the market expected this game to do incredibly well and that is what kept the stock at $16-$17 mark before the premium was set.
Bottom line, this stock is only worth $26 a share to EA, and with another 3 years before the next GTA game, that value is going to start to dwindle. Zelnick's hold out is very likely to cost the shareholders, not EA, in the end.
If EA takes over Take2, it's game over for us. ANY executive oversight is going to taint the development of any future products. We all know that EA is the Borg.
Bottom line, this stock is only worth $26 a share to EA, and with another 3 years before the next GTA game, that value is going to start to dwindle. Zelnick's hold out is very likely to cost the shareholders, not EA, in the end.
You do not realize the Power of the Dark Side, Take-Two. Embrace your destiny as EA Grand Theft Auto Sequel Factory!
Of course the above is my humble opinion and merely sarcasm and parody. Wink.