EA Walk Away From Take-Two Buyout

There's rumours! Rumours on the street. Wall Street, to be precise, as investment site Seeking Alpha say they've heard EA may be "walking away from merger talks" with long-time takeover target Take-Two. T2's conference call earlier today said nothing of this, of course, nor have EA (as the pair are now cosy in their cone of silence), so this is all conjecture, but it's hardly outrageous conjecture. The EA-T2 courtship rituals have been prologued, fumbling and, ultimately, boring, with a deal looking less and less likely the longer the whole sorry mess drags itself along.

It's D-Day For Take-Two Interactive [Seeking Alpha, via GamePolitics] [Image]

EA Extends Take-Two Offer As FTC Continues Investigating

It had to happen - EA has extended the expiration date for its bid to acquire Take-Two, while the Federal Trade Commission continues its investigation. Although EA recently certified its compliance with the FTC's broad-ranging request for information, the publisher reached an agreement with the FTC through which it promises not to complete any acquisition until August 21.

In that fashion, the extension is merely a formality, to allow the bid to remain outstanding until the investigation concludes. The new bid deadline is now August 18, so it's safe to assume we'll see at least one more extension at that time, since any move EA makes would need to be after the 21st.

It looks like EA has made a bit of small gain, though, as far as the likelihood of bringing the acquisition to fruition:

EA Clears FTC Hurdle In Take-Two Bid

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:

It's hard to believe by this year's E3 is one week away. The show unofficial kicks off at 10:30 a.m. Pacific on Monday when Microsoft starts their press conference. While the show floor, or what there is of a show floor, won't open until Tuesday, there will be plenty of events to look forward on Monday alone. Here's a run down of some of the highlights for the week:

Sunday
8 p.m. Kotaku Party: Open to everyone (21 and over)

Monday
10:30 a.m. Microsoft Presser
1 p.m. Shane Kim Roundtable
3 p.m. EA Presser
8:30 p.m. Gears of War 2 Reception

Tuesday
9 a.m. Show Floor Opens
9 a.m. Nintendo Presser
11:30 a.m. Sony Presser
2: 30 p.m. Ubisoft Presser
4:30 p.m. Capcom Presser
7 p.m. Activision Presser (Not technically a part of E3)

Wednesday
9:15 a.m. E3 Keynote by Gov. Perry
10 a.m. Sony Roundtable
10:45 a.m. Take Two Presser
1 p.m. State of the Industry Keynote
2:30 p.m. Konami Presser

There are, of course, plenty of booth tours, one-on-one interviews, meetings and parties that I didn't include in this concise snapshot. What are you most eager to check out? Me? I'm psyched for the big three's keynote's because those are almost always chockful of news. I'm also interested to see what both Take-Two and EA have to say at their pressers, I expect some news from both, maybe even related, though I sort doubt it. More than any year before, though, I think this E3 will be the year of the third-parties. Lots of big games being shown off.

Hit the jump to vote on what you most want to hear about and see next week.

Riccitiello: Take-Two Bid Focused On Holiday Season, Not GTA IV

Don't believe what the timing tells you - EA's bid for Take-Two was never about Grand Theft Auto IV. That's what EA CEO John Riccitiello told an audience of investors during William Blair & Company's annual stock conference, where he was a speaker today.

"For clarity’s sake, I think you’ve got a slight mis-remembering of what we said," Riccitiello told an audience member who asked about capitalizing on GTA IV's release value. "We were extremely explicit that there was no possibility whatsoever that we would be able to acquire the company or close the transaction prior to the release of GTA IV."

"What we said is we wanted to close the transaction in time to affect holiday sales for some of the games like Midnight Club, catalog for GTA and others. And so the reason we’re continuing to extend it, that was our plan all along and that was the way we described it at the time."

The questioner was probably prompted to the question by EA's recurring comments about the time sensitivity of their offer, but Riccitiello said that "the depreciating nature of the asset was not necessarily about GTA."

"It is that one more holiday period where we can sell more puts money onto the bottom line."

No End In Sight: EA Extends Take-Two Offer Again

Electronic Arts has announced this morning it has extended the deadline for its acquisition of Take-Two until July 18th, after the previous deadline expired at market close yesterday.

The publisher has not, however, raised its offer above $2 billion, or $25.74 per share, as the FTC's investigation process continues. Take-Two was recently asked to explain to the U.S. district court of Washington, D.C why it is refusing to fully comply with the commission's information request. Take-Two risks an injunction if it doesn't provide the full scope of info, which has been speculated to pertain to portions of its sports portfolio.

EA senior VP of corporate development Owen Mahoney congratulated Rockstar on Grand Theft Auto IV's successful launch, but maintained that despite the title's success, EA's offer "reflects a full and fair price based on the long-term value of Take-Two's entire operation."

Examining The Antitrust Issues In EA's Take-Two Bid

We know that, as we speak, the FTC is thoroughly investigating the possible takeover of Take-Two by Electronic Arts, to be sure that there are no antitrust issues. The FTC first made one request for information, and then a second one, indicating they're analyzing the deal very closely.

EA cut a deal with the FTC by which it consented to a 15-day extension on the investigation period, making it 45 days, and in return the publisher agreed it wouldn't move to acquire Take-Two until the investigation was closed or until the 45 days expired.

Newsweek's Level Up legal affairs columnist, former FTC lawyer Justin Blankenship, wrote a new piece trying to pin down exactly what issues the FTC might be looking at. Though the specifics are not public record and not likely to be sussed out easily, Blankenship learned a few details - like where the FTC's greatest area of concern likely is, and whether Take-Two is risking a legal injunction to stonewall EA:

EA, FTC Agree On Take-Two Bid Deadline, Another Extension Likely

Electronic Arts has agreed to wait on completing any potential acquisition of Take-Two until the Federal Trade Commission has completed its investigation of the possible merger, the company revealed today through an SEC filing.

Under the agreement, no transaction will be completed until the FTC has finished its probe, which can take up to 45 days instead of the customary 30.

"We've entered an agreement with the FTC to modify the scope," said an EA spokesperson. "This is a normal part of the review process, which allows us to move through the review as expeditiously as possible while giving the FTC additional time in which to complete its full review and work."

At the time EA last extended its tender offer until June 16th, corporate development VP Owen Mahoney said the extension would allow the FTC further time to complete its investigation. However, there are only 7 business days between now and the expiration of EA's current offer, not 45 - so it's reasonable to infer EA will extend its offer again to allow the FTC to fully complete its probe.

EA declined to comment on plans to extend the offer, but the spokesperson said, "You'll hear from us on or before the expiration."

The FTC also does not comment on the specific details of individual investigations.

Shareholders Stick With Take-Two

Electronic Arts may have recently extended the deadline for its bid to acquire Take-Two, but the company's shareholders don't seem ready to go quietly. EA's offer price remains at $25.74 per share, while as of today, Take-Two has seen share value just over the $27 mark.

A peek at recent SEC filings reveals another item of interest: When EA made its most recent deadline extension, its third, it stated that 6,210,261 shares of Take-Two stock had been tendered to EA as of May 16th. That's only a small percentage of what EA would need to acquire a majority - but its even less than they used to have.

At the time of the second extension, as of April 17th 6,432,787 shares had been tendered - which seems to suggest that 222,526 shares have gone back to Take-Two. Granted, those 222,526 shares are statistically tiny in the grand scheme of things, but even a small loss of stake seems an inauspicious sign for a company making a hostile bid.

On the other side of the coin:

EA Confirms Take-Two Offer Extension

Electronic Arts announced this morning that it has extended its bid to buy Take-Two. The prior bid expired on Friday, May 16th, and this latest extension, the third since EA announced its bid, gives the publisher until June 16th to negotiate a deal.

According to the latest SEC filing, EA has not raised its bid, as some analysts had speculated it would. The offer remains at $25.74 per share, and as of the time the filing was made, the company reported that only 6,210,261 shares had been tendered to EA - to acquire a majority stake, EA needs more than five times that many.

"Extending our offer will allow the FTC review process to continue," said EA VP of corporate development Owen Mahoney. "EA's offer price remains unchanged at $25.74 per share and our offer is still subject to conditions that include regulatory approval. As stated earlier, we retain the right to terminate the offer if the conditions are not satisfied."

Following EA's extension announcement, Take-Two executives also issued statements:

EA just won't take no for an answer! The Wall Street Journal reckon (ie they know ahead of an announcement) that since EA's last hostile takeover deadline passed, they're going to go right ahead and...set another deadline. Stop me if I'm wrong here, but if you set more than one deadline, it's not really a deadline, is it? It's more a "date you'd really like to have things sorted by, but if its not, that's cool".

EA May Extend Deadline for Take-Two Offer [Wall Street Journal]

Waitin' Until Friday: Where Things Stand On EA-T2

The deadline for Electronic Arts' bid to acquire Take-Two is this Friday, May 16th, so we thought it'd be a good time to review what we've learned so far to see where things currently stand.

First off, there's no shame in being the type whose eyes glaze over every time you hear something to do with "the market" or "analysts" or "diluted shares," and since this ongoing saga contains these phrases at several junctions, you may want to start with the easy, albeit detailed, summary of the whole works we recently wrote for you.

Still with me? Hit the jump for your handy roundup of our recent coverage:

EA Takes Out $1 Billion Loan For Take-Two Acquisition

SEC filings have revealed that Electronic Arts borrowed $1 billion from Morgan Stanley and other lenders to help finance a possible acquisition of Take-Two.

"There's no news here," said EA VP of communications Jeff Brown. "This is just a process point on something we announced in February."

With $2.3 billion on hand in cash, cash equivalents and short-term investments, EA already has the funds available to do the deal as it currently stands. With the deal not contingent on financing, why borrow more money?

"It helps us maintain maximum flexibility for any opportunities," said Brown.

Take-Two had no comment as of press time.

Analyst: Record GTA Sales Change Nothing For EA's "80/20" Take-Two Bid

Record-setting launch numbers for Grand Theft Auto IV had no significant impact on Take-Two's stock price this morning, lending credence to analyst views that the share price already included the expectation of extraordinary first-week sales of the title.

What does this mean for EA's ongoing bid for Take-Two? Cowen and Co. analyst Doug Creutz said this morning that even the GTA IV launch couldn't have elevated the share price from January's 17 dollars per share to its current 26-dollar range, and that right now the elevated price is due to investor eagerness for the sale.

"Take-Two's self-imposed moratorium [on negotiations] is over," said Creutz. "We haven't heard anything out of either company in the last week. They could be talking... I still think the odds that the deal happens that are very high... I don't think GTA changes that at all."

Industry Insiders Discuss ESA, E3's Future

What's the fate of E3, and of the Entertainment Software Association? It's worth examining in light of recent events. This morning we broke the news that two major publishers, Activision and Vivendi, have decided to take a pass on the event and exit the trade association, while other companies have withdrawn their E3 attendance as well. At the same time, the ESA appears to be facing stirrings of industry discontent with the ESA's leadership, namely its current president, Mike Gallagher.

E3 is not the boon to publishers that it once was, says Penny Arcade's director of business development Robert Khoo, who as the organizer of the PAX fan expo clearly has an interest, to say the least, in how things turn out.

"The reason that E3 imploded in recent years was because the publishers felt that it turned into this sort of pissing contest between them... where they were trying to figure out who could one-up each other," Khoo said. "They all thought to themselves that it just wasn't worth it."

German Govnt Approves Possible Take-Two Aquisition

In a late afternoon filing with the Securities and Exchange Commission today, Electronic Arts reports that the German Federal Cartel Office has OKed the planned acquisition of Take-Two by EA.

“In addition to our filing under the HSR Act with the DOJ and FTC, on March 25, 2008, Purchaser made a pre-merger filing with the German competition authorities. On April 24, 2008, Purchaser was notified by the German Federal Cartel Office that the proposed transaction had been cleared.”

EA Extends Take-Two Tender Offer

Following last night's Take-Two shareholder meeting, which Leigh was kind enough to cover, Electronic Arts has announced that they are extending the deadline on their tender offer to May 16th, 2008. The offer was originally extended from its original April 11th deadline to today in response to Take-Two's rescheduling of the annual shareholder meeting.

Also, as a result of Take-Two issuing additional stock following the approval of the company's incentive stock plan, the price per share EA is offering has dropped to $25.74 from $26.

EA reveals that as of 5PM yesterday, 6,423,787 shares of Take-Two common stock had been tendered in and not withdrawn from the offer.

For more on how all this works, be sure to check out Leigh's feature on the takeover.

FTC Issues EA Second Anti-Competition Inquiry

While EA believes that its proposed transaction with Take-Two would not be anti-competitive, the FTC has not yet reached any conclusions regarding the proposed acquisition and has indicated that it needs further information and additional time to conduct its review.