News Post


Proposal Represents 64 Percent Premium to
Take-Twos February 15th Closing Price and 63 Percent
Premium to Take-Twos Closing Price Over the Previous 30 Days

REDWOOD CITY, Calif., Feb. 24, 2008 Electronic Arts Inc. (EA) (NASDAQ: ERTS) today announced that it has proposed to acquire Take-Two Interactive Software, Inc. (Take-Two) (NASDAQ: TTWO) in an all-cash merger valued at approximately $2.0 billion.

EAs proposal of $26 per share in cash represents a premium of 64 percent over Take-Twos closing stock price on Feb. 15th, the last trading day before EA sent its revised proposal to Take-Two, and a 63 percent premium over Take-Twos 30-day trailing average price over the thirty trading days ending on that date.

EAs proposal was contained in a letter sent on Feb. 19th by EA Chief Executive Officer John Riccitiello to Strauss Zelnick, Executive Chairman of the Board of Directors of Take-Two. The Take-Two Boards subsequent rejection of the EA proposal led to EAs decision to release the letter and bring its proposal to the attention of all Take-Two shareholders.

Mr. Riccitiello said today: Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Twos game designers would also benefit from EAs financial resources, stable, game-focused management team, and strong global publishing capabilities.

The EA letter warned that further Take-Two delay in accepting EAs proposal could prevent Take-Twos shareholders and other constituents from realizing its benefits. There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today, Mr. Riccitiello wrote. The letter added that timely completion of the proposed transaction would allow EAs strong publishing and distribution network to positively impact the ongoing post-launch sales of GTA IV and support the new Take-Two titles scheduled for launch later in the year and during the holiday selling season.

As noted in EAs Feb. 19th letter, EAs proposal is not conditioned on any financing requirement. It is, however, subject to certain customary conditions as set forth in the letter. EAs $26 per share proposal is based on the current equity capitalization of Take-Two. Although EA indicated in the letter that its proposal was subject to negotiations commencing by Feb. 22nd, EA intends to keep its proposal open for the present to give Take-Twos shareholders and Board of Directors further time to consider it.

The full text of EAs letter to Take-Two follows:

February 19, 2008

Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012

Dear Strauss:

Thank you for your letter of February 15, 2008. While I appreciate its courteous tone and value our ongoing dialogue, I am disappointed that you have rejected Electronic Arts Inc.s (EAs) $25 per share cash offer to acquire Take-Two Interactive Software, Inc. (Take-Two) and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So, to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EAs offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash. This offer is subject to Take-Two agreeing by February 22, 2008 to commence negotiation of a definitive merger agreement and to permit EA to commence a limited due diligence review of Take-Two.

Our revised all-cash offer represents a 64% premium over Take-Twos most recent closing price and a 63% premium over Take-Twos 30-day trailing average price (based on prices as of market close on Friday, February 15th). We believe our offer represents a unique and compelling opportunity for Take-Two shareholders to maximize the value of their investment in the company, with materially lower risk than if Take-Two proceeds on a stand-alone basis.

We also believe that the transaction we are proposing represents a uniquely attractive opportunity for Take-Twos creative teams and key employees. EA is a diversified leader with well-established franchises and proven intellectual properties, global reach, and significant financial resources. I know we both agree that Take-Twos talented creative teams deserve a permanent home within a stable and growing publisher that provides these teams an environment to do what they do best create great games. EA is organized in a four-label model that provides our creative teams the autonomy they need to fully realize their creative ambitions, while also providing a stable and supportive corporate and publishing infrastructure which allows them to best address the global marketplace. We have the resources to make the significant investments in technology and infrastructure needed for the most creative and innovative games in the industry. In short, a combination with EA would provide Take-Twos studios and employees a combination of the right resources for investment and global reach, and the right environment to do their best work.

We believe that Take-Twos shareholders would not be well-served by any further delay in negotiating and completing the proposed merger. While the videogame industry remains an attractive, high-growth business, the challenges and risks in the business are escalating, and the need for scale is becoming more pronounced. Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.

We also believe that any delay in this proposed transaction works against the interest of Take-Twos shareholders, because:

There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EAs strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this years holiday selling season.

We believe Take-Twos current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two.

We also believe the transaction we are proposing will create value for EAs shareholders. In addition to the top-line benefits noted above, we can achieve bottom-line benefits by combining Take-Twos and EAs corporate and publishing infrastructures and by optimally supporting Take-Twos creative teams and intellectual properties in EAs decentralized label structure.

Considerable thought, time and resources have been put forth in developing this offer, and our Board of Directors unanimously supports it. Our offer is not conditioned on any financing requirement. It is subject to the satisfactory completion of a due diligence review of Take-Two, the negotiation and execution of mutually acceptable definitive transaction agreements, and the satisfaction of customary conditions to be set forth in such agreements. We are prepared to move forward immediately with formal due diligence and the negotiation and execution of a definitive merger agreement and believe that with adequate access to the necessary information and people, we can complete both in approximately two weeks. We believe that our due diligence review can be completed with minimal disruption, requiring only limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisors. We also have prepared a draft merger agreement that we can forward to you immediately.

Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Twos shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Twos shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22.

John Riccitiello
Chief Executive Officer
* * *

Conference Call

Electronic Arts will host a conference call on Monday, February 25, 2008 at 5:00 am PT (8:00 am ET) to discuss its proposal to acquire Take-Two Interactive and may disclose other material developments affecting its business and/or financial performance. Listeners may access the conference call live through the following dial-in number: (877) 795-3647, access code 220497, or via webcast at http://www.eatake2.com.

A dial-in replay of the conference call will be provided shortly after the call ends and remain available until March 3, 2008 at (719) 457-0820, access code 220497. A webcast archive of the conference call will be available shortly after the call ends at http://www.eatake2.com.

Member Comments
# 1 canman @ 02/24/08 01:41 PM
Not good...
# 2 Rocky @ 02/24/08 01:44 PM
Only a matter of time....
# 3 aukevin @ 02/24/08 01:45 PM
whoa. Only a matter of time is right.
# 4 Brandwin @ 02/24/08 01:47 PM
I can't blame EA, but damn...
# 5 PAPERNUT @ 02/24/08 01:47 PM
God save the sports game.
# 6 NEW_ORLEANS @ 02/24/08 01:48 PM
I might give up gaming.
# 7 jsg @ 02/24/08 01:53 PM
sad day in gaming if this happens
# 8 Spectre @ 02/24/08 01:55 PM
Sad, sad day

As EA scoops up more and more developers, any semblance of competition is wiped out from all realms of gaming.

This reminds me precisely why I play videogames at a fraction of the rate I used to just a few years ago.
# 9 Kashanova @ 02/24/08 01:57 PM
this is effin gay
# 10 B-Wills @ 02/24/08 02:01 PM
Sports gaming is officially screwed.
# 11 beau21 @ 02/24/08 02:01 PM
its probably just me being hopeful/wishful about the situation

but as far as the APF 2k series goes... does anyone think there is a chance EA keeps it?

i mean think about this... they could put out Madden NFL and an NFL Legends game...

its at least a thought
# 12 thaima1shu @ 02/24/08 02:03 PM
Originally Posted by Kashanova
this is effin gay
Couldn't have said it any better myself.
# 13 Spectre @ 02/24/08 02:04 PM
I wouldn't be surprised to see EA go exclusive with the MLB license when/if this happens.

Goodbye Show
# 14 gta95 @ 02/24/08 02:06 PM
# 15 trobinson97 @ 02/24/08 02:07 PM
Can't say I am surprised, but damn it's disappointing. I imagine it'd be too much to ask that T2 tell EA to take their money and wipe their asses with it.
# 16 Spin @ 02/24/08 02:07 PM
if this occurs, what does this mean for the 2k9 games?
# 17 nemesis04 @ 02/24/08 02:09 PM
I do not like this at all! Their exclusivity deals tend not be as kind and generally make them the sole developer of a game within a sports genre, then we would be down to only one baseball game!
# 18 ahuey58 @ 02/24/08 02:10 PM
this is great. now the greastest minds from both companies can come together and make great games using EA's capital and power in the marketplace.
# 19 theaub @ 02/24/08 02:10 PM
# 20 theaub @ 02/24/08 02:10 PM
Originally Posted by ahuey58
this is great. now the greastest minds from both companies can come together and make great games using EA's capital and power in the marketplace.

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