Take-Two has recommended that its shareholders fight Electronic Arts' hostile takeover attempt, categorizing it as being "opportunistically timed to capture the value of the upcoming Grand Theft Auto IV launch at the expense of our stockholders."
Take-Two chairman Strauss Zelnick called EA's offer of $26 per share "insufficient", and saying it was simply "the wrong price and the wrong time." The board therefore recommended that shareholders reject the offer and avoid the takeover.
Take-Two's board issued a statement today that confirmed the company's willingness to explore alternatives "to maximize value for stockholders," which might include a merger with a third party, a merger with EA, or simply staying independent.
Take-Two also announced that other third parties have expressed interest in the company since EA's bid, and that while Take-Two is willing to "engage in preliminary conversations with interested parties, including EA," no decisions will be made until after the release of GTA IV.
Wedbush Morgan Securities analyst Michael Pachter believes the rejection was an unwise move on the part of Take-Two. "The strategy adopted by Take-Two's Board was ill-advised," he said this morning. "Had they offered an olive branch, we think that EA may have increased its offer by $1 or more."
"We think that Take-Two's position that the company will have greater value after the release of Grand Theft Auto IV is naive at best, and disingenuous at worst. Take-Two's share price prior to EA's offer fully
reflected the success of the game, and we don't believe that EA's $26 offer was made without an assessment of the potential of the game," Pachter said.
Image courtesy Rockstar Games
(Update 1: Added Wedbush Morgan analysis.)
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