Electronic Arts offers $2bn for Take-Two
US games publisher Electronic Arts (EA) has made an offer for competitor Take-Two. According to a press release, EA has offered $26 per share, 63 per cent above Take-Two's average share price over the last 30 days, and 50 percent more than its closing price on Friday. The total take-over price is $2bn.
With this bid, EA follows the gaming industry's trend to consolidate after ActiVision and Vivendi Games announced a fusion towards the end of last year. At that time, EA had started negotiations with Take-Two and initially offered $25 per share on February 6. According to a press release, the board of directors of Take-Two already declined both this and the latest offer. Among the reasons given were that the offer is too low but also that the company's ongoing turnaround has not yet been completed.
EA's CEO John Riccitiello writes in an open letter that the industry faces big challenges since development costs have risen dramatically and games often struggle to make profits. After his return as a CEO a year ago, a new organisational model was introduced at EA, giving developers more freedom. Every team is responsible for its own results and profitability, he writes.
According to Riccitiello it's still to early to draw conclusions, but reports from studios like Digital Illusions in Stockholm, Criterion in the UK, Mythic in the US as well as BioWare and Pandemic are encouraging. Take-Two's creative team develops fantastic games, but the company's future is uncertain, he added. Riccitiello considers it likely that even without EA's takeover bid the company will be sold in the near future. EA are fans of Take-Two, and their preference is to make this a friendly transaction, he said.
In summer 2005, Take-Two had hit the headlines following a scandal around a "Hot Coffee Mod", which enabled sex scenes in Grand Theft Auto: San Andreas, and mismanagement accusations in the following year. GTA San Andreas could only be sold to adults in the US, and in Australia the title completely disappeared from the shelves. The sex scandal was investigated by the US Federal Trade Commission (FTC) and by public prosecutors. The Exchange Supervisory Authority also investigated the company's share option scheme.