Electronic Arts has satisfied the Federal Trade Commission's extensive second request for information in the publisher's bid to acquire Take-Two, the company revealed through an SEC filing today - and, pursuant to EA's agreement with the FTC, it won't "consummate" any acquisition before August 21.
That is, unless the FTC finishes its investigation sooner. It's now got the information it needs from EA in its quest to determine possible antitrust issues, but Take-Two has appeared to struggle with fulfilling the broad-ranging request; when it was initially uncompliant, the District Court of Washington, D.C. had demanded it show cause, with Take-Two risking an injunction if it failed to pony up.
However, Tiffany Steckler of EA's corporate communications said that the August 21 timeline applies regardless of what Take-Two does:
"Whatever happens with Take-Two's process doesn't impact [the FTC's] timing, because our agreement with the FTC provides that they complete their review within the 45 days," she said.
Take-Two eventually reached a compromise with the FTC through which it'd be able to provide all the necessary information, but it has yet to fully certify compliance with the FTC, as EA has done as of market close yesterday.
EA's offer still remains at $25.74 per share, which for the past several weeks has been slightly below Take-Two's daily average share price — but now, things have changed:
Take-Two is currently trading at $23.99, which might make a sale to EA a big gain for shareholders in an economic downturn. Why has Take-Two's price been slumping?
Many analysts had theorized that, once the hype around Grand Theft Auto IV's launch began to ebb, Take-Two's share price would see a gradual adjustment back downward. Prior to EA's offer, the price per share had lingered at about $17 before the stock saw a spike largely on anticipation of the offer, and in some part on the strength of GTA IV. But it may be that post-launch for the major title, while at the same time EA's offer appears to hang in compliance limbo, investors are becoming impatient and selling off.
Most likely, though, the lower share price is due to the overall market downturn and concern about oil prices, and has nothing to do with EA's offer, says Wedbush Morgan analyst Michael Pachter. EA, as well as many other companies in the industry, are seeing somewhat lower values as well.
"It's nothing in particular concerning video game stocks," Pachter said. "Take-Two is worth the same, it won't impact EA's offer."
Said a Take-Two spokesperson, "Our position with respect to EA's tender offer remains unchanged. Take-Two's Board is committed to and focused on a process of considering all strategic alternatives to maximize the value of Take-Two. We are considering any and all alternatives which will deliver greater value to stockholders than the current EA offer."