EA extends its offer for Take-Two, lowers bid price

The leading video game publisher Electronic Arts Inc. said Friday it would further extend its offer for Take-Two Interactive Software Inc. by one month to May 16, and would trim trimmed its offering price to $25.74 from $26 a share.

In March, Electronic Arts tendered an offer to acquire all of Take-Two's outstanding shares for $26 a share in cash, but the maker of the highly popular "Grand Theft Auto" video-game series rejected EA’s second and more aggressive buyout bid saying that the $26 per share price tag is too low, and is not in the best interests of its stockholders.

EA, the maker of “Need for Speed” racing and “Madden” football games, approached Take Two with a $26-a-share offer on Feb. 19 after the company rejected its initial offer worth $25/share on Feb. 15.

On March 28, EA had announced it extended its tender offer for Take-Two by a week to April 18. The company also said at the time that it would lower its per-share bid to $25.74 from $26 if the company’s shareholders adopt the proposed poison pill plan.

On Friday (April 18) morning, EA said it has lowered its bid to $25.74 a due to a change in Take-Two's stock incentive plan that allows for the issuance of 1.5 million additional restricted shares to Take-Two's management firm, ZelnickMedia. EA said the deal is still valued at $2 billion.

In response to EA’s latest amendment to its bid, Take-Two said that shareholders are more attractive to the company's efforts to enhance its value than the take-over bid.

Responding negatively to the EA extension, Take-Two Chairman Strauss Zelnick said, “Take-Two's board of directors has maintained from the beginning, and continues to believe, that Electronic Arts' proposal undervalues our company. It undervalued the company at $26 per share, and it certainly undervalues Take-Two at $25.74.”

Take-Two said it didn't want to discuss the offer until after the release of its "Grand Theft Auto IV" video game, the fourth version of the "Grand Theft Auto" video-game series that has sold 65 million copies and is considered one of the most successful video games in history.

Take-Two has urged the stockholders to reject rival company's offer but said it would be open to discussion after the release of GTA IV. The latest extension pushes the bid past the April 29 release of GTA IV.

Meanwhile, EA has said that if the potential acquisition of Take-Two is delayed further, it would be hard for EA to keep its offer alive at the $2 billion value or possibly any price.

New York-based Take-Two’s shares rose 0.9% to $26.09 in morning trading, while EA’s shares rose 1.9% to $52.42.