One of the best feelings is finishing an article about something I feel strongly about. One of the worst feelings is waking up the next morning to find that everything you wrote is no longer relevant. Such is the case with Electronic Arts and Take Two Interactive.
Some interesting facts have been placed in front of the world wide web lately. After plucking BioWare and Pandemic from their tiny little houses Electronic Arts tried to scoop up Take Two Interactive, publishers of the child favorite Grand Theft Auto.
Since Take Two said "hell no" two weeks ago, everyone from the employees to the shareholders have expressed their concern, worried that EA will make an offer T2 can’t refuse. On Tuesday the two largest shareholders (Oppenheimer Funds and FMR LLC) sold off a combined 10% of the company. Between the two of them they now control just under 30% of Take Two Interactive.
In response to the EA buyout threat Take Two also cooked up a severance package to appease the executives worried they would loose their jobs if EA swallowed them. It promises 1.5 times their current salary as well as a bonus for 18 months following their termination. It’s a pretty sweet deal for those guys to actually be getting a raise upon their termination.
This whole EA wanting to buy Take Two seems really weird. EA is a gigantic publisher who recently just cut itself up into pieces make things run smoother. Buying out another gigantic convoluted publisher seems counterproductive. Their recent purchase of Pandemic and BioWare however makes sense to me. Buy developers that have promising games or emerging franchises and you can cash in on the sequels or emerging technology (i.e. dialogue trees).
Apparently my opinion stands for nothing. This morning the Wall Street Journal reports that EA’s offer has turned hostile. They offered to buy the outstanding shares of the company directly from the shareholders for 26 dollars per share. That’s 4% more than it is worth at the market value at the closing bell yesterday.
Take Two’s board of directors has suggested that shareholders "take no action" with in regards to the offer. The board will review the purchase within ten business days and then decide what they plan on doing about EA.
What does this mean? This means that EA will have its T2 no matter what. With Oppenheimer Funds and FMR dumping stock earlier this week, and shareholders seeing an opportunity to turn a quick buck it will be only a matter of time before they are consumed.
I can only partly see why EA wants to grab Take Two. Yeah, Grand Theft Auto is coming out soon and it promises to make oodles of cash; cash that EA wants in their pockets. And Take Two made a big splash last year with BioShock, (spiritual successor to SystemShock, formerly published by EA). But that’s really it. You could argue the sports angle, but the EA sports titles consistently outsell the competition, so it doesn’t matter who makes the better game.
Unless T2 has some crazy magic up their sleeve that would revolutionize the gaming industry, I don’t see EA gaining anything from taking them over; except becoming the largest publisher again, a title that was stripped from them recently by Activision. And that’s my guess. This whole thing is about whose wang is bigger. EA just can’t stand to be second.
[via WSJ Online, Kotaku]
