The board of directors of Take-Two Interactive, owners of Grand Theft Auto
developer Rockstar Games, have formally decided to reject Electronic Arts' bid to acquire outstanding stock in the company, citing the $26 per share cash offer as "inadequate" and contrary to the best interest of stockholders.
Electronic Arts' initial bid to acquire the company was rejected by Take-Two
last month, after which Electronic Arts began a hostile takeover
by attempting to acquire all outstanding stock directly from shareholders. Take-Two's board had urged shareholders to resist Electronic Arts' approaches until the new offer could be reviewed - a process which is now complete.
At the same time the board has stated that it will "explore alternatives to maximize value for stockholders, which may include a business combination with third parties or with EA." Any such deal is intended to see the publisher remain independent, while providing a higher payout to stockholders than the current Electronic Arts offer.
As before, the company has ruled out any serious negotiations or announcements until after the release of Grand Theft Auto IV
, widely expected to be one of the most successful games of the year, at the end of the month.
Interest from third parties other than Electronic Arts has again been hinted at, after first being mentioned in a Securities and Exchange Commission filing last month
, although again no details have been given.
Although the company insists that no "substantive" discussions have yet occurred, it has begun to assemble the materials necessary for interested parties to conduct due diligence. Take-Two also states it is willing to enter into confidentiality agreements on customary terms and to engage in "preliminary" conversations with interested parties, including Electronic Arts, before the release of Grand Theft Auto IV
The company also announced that it has adopted a Stockholders Rights Agreement to protect stockholders against unsolicited attempts to acquire control of the company at an inadequate price or which is otherwise deemed not to be in the best interests of Take-Two and its stockholders. The rights become exercisable if any entity acquires 20 percent of more of common stock, but will not apply to existing stockholders unless they acquire an additional 2 percent of stock.
Board chairman Strauss Zelnick, 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," Zelnick continued, "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," he concluded.