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NEW YORK--(BUSINESS WIRE)--The Board of Directors of Take-Two Interactive Software, Inc. (NASDAQ:TTWO - News) today confirmed that it has received an unsolicited proposal from Electronic Arts Inc. (NASDAQ:ERTS - News) to acquire Take-Two for $26.00 per share in cash. Take-Two’s Board of Directors has thoroughly reviewed EA’s unsolicited proposal with the assistance of its independent financial and legal advisors and concluded that the proposal is inadequate in multiple respects and not in the best interests of Take-Two’s stockholders.

After careful evaluation, the Board has determined that EA's proposal substantially undervalues Take-Two’s robust and enviable stable of game franchises, exceptional creative talent and strong consumer loyalty. We believe EA's unsolicited offer is highly opportunistic and is attempting to take advantage of our upcoming release of Grand Theft Auto IV, one of the most valuable and durable franchises in the industry. Furthermore, the offer values the Company at a significant discount to its public peers and does not compensate Take-Two for its intrinsic value and the substantial synergies that the proposed combination would create.

Strauss Zelnick, Executive Chairman of the Board of Take-Two commented, “Electronic Arts’ proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives underway at the Company. Thanks to the extraordinary efforts of our creative and business teams, Take-Two has made enormous strides in the past 10 months toward our common goal of being the most creative, innovative and efficient company in our industry. We're extremely proud of our unique portfolio of game franchises, exceptional creative talent and loyal consumer following. Our Board believes that we will build greater value for our stakeholders by remaining relentlessly focused on our strategy and delivering on our mission of making the highest quality interactive entertainment."

Mr. Zelnick continued, “In addition to undervaluing key elements of our business, EA’s proposal fails to recognize the value we are building through our ongoing turnaround efforts, which will further revitalize Take-Two. While we have made substantial progress already, the turnaround of our business which we initiated in June is not yet complete, and we believe its benefits have not been recognized in either our current stock price or in the value of EA’s proposal."

Mr. Zelnick added, “While the Board believes that entering into discussions with EA at this time is not in the best interests of shareholders, we had offered to enter into a good-faith dialogue with EA to determine if our companies can reach common ground on the appropriate value of Take-Two as a first step to realizing a mutually beneficially transaction. However, given the great importance of the Grand Theft Auto IV launch to the value of Take-Two, the Board has determined that the only prudent and responsible course for our Company and its stockholders is to defer these discussions until immediately after Grand Theft Auto IV is released. Therefore, we offered to initiate discussions with EA on April 30th, 2008 (the day after Grand Theft Auto IV is scheduled to release). We believe this offer demonstrated our commitment to pursuing all avenues to maximize stockholder value, while we believe that EA’s refusal to entertain this path is evidence of their desire to acquire Take-Two at a significant discount, whereas we believe this value rightly belongs to our stockholders.”

Take-Two has a proven track record of creating and acquiring ownership of valuable new intellectual property. Grand Theft Auto is one of the industry’s top franchises, having sold more than 65 million units to date. Over the past year, Take-Two has continued to expand its owned intellectual property portfolio, with two new franchises established – BioShock, one of the highest rated games of all time and winner of numerous “Game of the Year” awards, which has sold over 2 million units to date – and Carnival Games, a casual game for the Wii™, which has sold over 1 million units to date. Take-Two’s other proven million-unit selling video game franchises include Midnight Club, Sid Meier’s Civilization, Bully, Red Dead Revolver, Max Payne, Rockstar Games presents Table Tennis, Manhunt, Red Dead Revolver, Mafia, The Darkness, Spec Ops, Sid Meier's Railroads! and Sid Meier's Pirates! Take-Two also has powerful and growing sports franchises, with licenses for leading brands, including Major League Baseball® 2K, NBA® 2K and NHL® 2K, and proprietary sports brands, such as Top Spin, All Pro Football and Don King Presents: Prizefighter. Additionally, Take-Two has a partnership with Nickelodeon to publish video games based on top rated Nick Jr. titles such as Dora the Explorer and Go, Diego, Go!

Ben Feder, Chief Executive Officer of Take-Two, commented, “The revitalization of Take-Two is well underway. In the last year, we have accomplished a great deal in terms of restructuring our cost base to improve margins, addressing the legacy issues that have weighed on our business, and enhancing our creative output through organic and external initiatives. We believe stockholders will reap the benefits of these actions both in the near and long term and that our efforts will create greater value for stockholders than what is being offered by EA at this time.”

As part of its turnaround plan, Take-Two has implemented a more streamlined and efficient operating structure, put in place a $25 million cost cutting initiative, instituted a disciplined Product Investment Review Process, restructured international operations to create a more efficient and responsive international organization, consolidated the majority of 2K Games and 2K Sports operations on the West Coast to increase efficiency and better support the growth of these labels, and sold its non-core Joytech business.

To continue to position itself for the future, the Company has begun to more aggressively leverage potential growth opportunities, with the acquisition of Illusion Softworks development studio and the formation of the 2K Play label to focus on the family and casual games market.

In addition, current management has secured a $140 million line of credit, announced a preliminary settlement of the “Hot Coffee” class action and made significant progress in resolving the New York District Attorney and SEC actions that have been pending against Take-Two since June 2006 and July 2006, respectively.

Mr. Feder concluded, "We remain committed to executing our existing business strategy and turnaround plans and to building value for all of our stockholders. We intend to vigorously resist any attempt by EA to acquire Take-Two at a price that does not adequately value our Company and its growth opportunities."

Bear Stearns and Lehman Brothers are acting as financial advisors to Take-Two and Proskauer Rose LLP is acting as a legal advisor.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

For more information, please visit http://www.transactioninfo.com/taketwo/.

Member Comments
# 1 Steve_OS @ 02/24/08 05:12 PM
We can all calm down, for now...
 
# 2 SPTO @ 02/24/08 05:19 PM
I heard a rumor that Viacom would buy Take-Two. I think that'd be a far better fit then EA.
 
# 3 ChaseB @ 02/24/08 05:24 PM
For sports fans, most every company but EA would make more sense for TT.
 
# 4 SportsTop @ 02/24/08 05:29 PM
Quote:
Originally Posted by Steve_OS
We can all calm down, for now...
I don't think the skies are clear just yet.

EA's next step will be to take their proposal to TT's shareholders (this is why they made their failed bid public in the first place). If the shareholders think EA's proposal is the best they can get and a better guarantee than TT's uncertain future then it could make for a successful hostile take-over by EA.
 
# 5 Mo @ 02/24/08 05:30 PM
Quote:
Originally Posted by Jon22
Woooo.... I was pissed earlier about this. If people wouldn't buy EA's games. EA wouldn't be in this position to acquire so many companies as they do. Stop complaining about what EA does or stop buying EA games, plain and simple!
Then if people didn't buy EA games, then EA wouldn't be in business, so how is that any better.
 
# 6 Steve_OS @ 02/24/08 05:31 PM
Quote:
Originally Posted by Squint
I don't think the skies are clear just yet.

EA's next step will be to take their proposal to TT's shareholders (this is why they made their failed bid public in the first place). If the shareholders think EA's proposal is the best they can get and a better guarantee than TT's uncertain future then it could make for a successful hostile take-over by EA.
Right, hence the "for now..."
 
# 7 Spectre @ 02/24/08 05:32 PM
Here's a good read at Kotaku
http://kotaku.com/360138/ea-ceo-take...-take-over-bid

Quote:
News of this offer brings to mind, for me, rumors I heard earlier this week that a large company (I heard Microsoft, but it could just as easily be EA) was in fact courting some of Take-Two's largest shareholders in an effort to line-up a hostile take-over if an equitable purchase couldn't be arranged, a question that riled the folks at EA.
That's interesting...

Quote:
When I told Riccitiello about Take-Two's desire to forestall talks until after the GTA launch, perhaps because they want to see how one of their top titles will do before selling, he said that they did their best to hold off on their offer. In fact EA first approached the board in December, but decided to wait on starting serious talks to make sure the rumblings wouldn't create problems for the Rockstar team working to get the game wrapped up. But now, Riccitiello believes, the company is pretty much done and the time to talk is almost past.
I don't see big-time negotiations happening. Bottom line, EA wants to get this done before GTA releases to capitalize on the release of the game.
 
# 8 SportsTop @ 02/24/08 05:35 PM
Quote:
Originally Posted by Spectre
I don't see big-time negotiations happening. Bottom line, EA wants to get this done before GTA releases to capitalize on the release of the game.
Agreed. It'll be interesting to see what happens but I won't be surprised when EA successfully purchases TT prior to April 29th (when GTA is released).
 
# 9 Spectre @ 02/24/08 05:42 PM
Quote:
Originally Posted by Squint
Agreed. It'll be interesting to see what happens but I won't be surprised when EA successfully purchases TT prior to April 29th (when GTA is released).
I agree- the ONLY way a deal gets done is before the release of GTA.
 
# 10 SageInfinite @ 02/24/08 05:44 PM
So if a deal gets done before GTA releases, will EA benefit from all the sales of GTA? Will we see EA games on the box art?
 
# 11 Spectre @ 02/24/08 05:44 PM
Quote:
Originally Posted by SageTheInfinite
So if a deal gets done before GTA releases, will EA benefit from all the sales of GTA? Will we see EA games on the box art?
Probably not, but they will reap the benefits of $$$ which I think is more important than brand recognition in this deal.
 
# 12 PVarck31 @ 02/24/08 08:24 PM
Man, this could be good and bad. It would be great to see MVP Baseball back, but at the same time sad to lose NBA 2k8. I don't know what to think, from what I have read this seems like not if but when.
 
# 13 Brophog @ 02/24/08 09:09 PM
Quote:
Originally Posted by Spectre
I agree- the ONLY way a deal gets done is before the release of GTA.
Disagree entirely. Once these deals go public, they almost always get done. There's usually a reason they're far enough in the process for it to have gone public.

It may happen before, may happen after.......but it'll get done. They'll both use GTA as a negotiating tool to move the price if necessary, but as long as the deal seems to be in their mutual interest (which is usually what's not in ours)......it'll happen.
 
# 14 RAZRr1275 @ 02/24/08 09:48 PM
I am so happy that this didn't go through. Hopefully it stays this way.
 
# 15 The GIGGAS @ 02/24/08 09:51 PM
Quote:
Originally Posted by Jon22
Woooo.... I was pissed earlier about this. If people wouldn't buy EA's games. EA wouldn't be in this position to acquire so many companies as they do. Stop complaining about what EA does or stop buying EA games, plain and simple!
You're totally going to reach the millions of people that buy EA games on OS.

Great job yelling into the internet.
 
# 16 allBthere @ 02/24/08 09:51 PM
Quote:
Originally Posted by Spectre
Probably not, but they will reap the benefits of $$$ which I think is more important than brand recognition in this deal.
it's not about fast cash at all actually.

they would pay over 2 billion dollars, so it's not like they would feel the benefit immediately. This is more like a buyout that rreally rewards EA over the next 3 years. There are other costs w/ acquisitions other thna just the money to buy. There are restructuring cost, accounting etc..
 
# 17 PAPERNUT @ 02/24/08 09:54 PM
The board members will fill their pockets with the GTA profits, then sell out shortly afterwards. $ is all that matters to both parties, not the gamers and what it will mean to sports gaming in general.
 
# 18 Brophog @ 02/24/08 10:01 PM
They're essentially, actually, buying brand recognition. The one thing we're seeing across the board in gaming is a real difficulty in developing new IP's. Even Nintendo has struggled on creating new franchises.

Those IP's anymore are becoming really valuable in a marketplace that demands such high quality and increasing development expense. Profits are so tied to franchises guaranteeing sales now, that new IP's are expensive to generate and the cash guarantees of having established franchises give you license to take a few risks on titles that would otherwise never be green lighted.

The real problem is, the average game will lose any company money. EA, Nintendo, Sony.......all of them. Doesn't matter how much money or how successful you perceive them to be, look at their profit sheets and their profits are centered around whichever quarter their franchise titles come out.

Personally, I think this is just another sign that gaming is going to (once again) collapse under the weight of its own "success". You may think that ironic due to the ever increasing sales records for the industry, but when you divide those numbers up amongst all of the games and all of the expenses, it's not too hard to fathom. It's simply too expensive to make games now, and as a company, you absolutely need as many titles such as GTA, Madden, Halo.....etcetera.....as you can get. They are the primary sources that give you the opportunity to make everything else.
 
# 19 Spectre @ 02/24/08 10:05 PM
Quote:
Originally Posted by Brophog
Disagree entirely. Once these deals go public, they almost always get done. There's usually a reason they're far enough in the process for it to have gone public.

It may happen before, may happen after.......but it'll get done. They'll both use GTA as a negotiating tool to move the price if necessary, but as long as the deal seems to be in their mutual interest (which is usually what's not in ours)......it'll happen.
The Yahoo-Microsoft deal was pretty public
 
# 20 Brophog @ 02/24/08 10:21 PM
Quote:
Originally Posted by Spectre
The Yahoo-Microsoft deal was pretty public


That's a great example of what I am talking about. Microsoft and Yahoo talked several years ago about pairing up.

http://valleywag.com/351543/yahoo-of...ong-flirtation


And you know what, here we are, talking about the possibility of it happening.

http://news.yahoo.com/s/afp/20080223...SKNKHCqN2IzdAF

It may have taken a few years, but the idea did not die off, and in the end, Microsoft is convinced this deal will somehow get done.
 

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