Electronic Arts extends tender offer, drops price for Take-Two

By Lisa Kerner

Charlotte, N.C., April 18 - Electronic Arts Inc. extended its tender offer for Take-Two Interactive Software, Inc. to 11:59 p.m. ET on May 16 from April 18 and decreased its offer price to $25.74 from $26.00 per share, it was announced on Friday.

On Feb. 15, Take-Two turned down Electronic Arts' unsolicited proposal to acquire the company for $25.00 per share and said no to the revised $26.00-per-share offer.

The $25.74-per-share price takes into consideration additional shares to be issued to Zelnick Media following stockholder approval of an amendment to Take-Two's incentive stock plan at its 2008 annual stockholders meeting on April 17, an Electronic Arts news release stated. Total consideration for Take-Two shares remains unchanged at some $2 billion.

"Take-Two's board of directors has maintained from the beginning, and continues to believe, that Electronic Arts' proposal undervalues our company. It undervalued the company at $26 per share, and it certainly undervalues Take-Two at $25.74," Take-Two chairman Strauss Zelnick said in a company statement.

Electronic Arts said it believes the offer price is "full and fair."

As of 5 p.m. on April 17, 6,432,787 shares, or 8.3%, of Take-Two had been tendered in and not withdrawn from the offer.

"The minuscule number of shares tendered, as well as the strong vote in favor of the proposals presented at our annual meeting, offer indisputable evidence that our stockholders regard our efforts to enhance Take-Two's stockholder value as superior to the Electronics Arts offer," Zelnick added.

A transaction between Electronic Arts and Take-Two is "the most compelling combination financially, strategically and operationally for all parties," according to Electronic Arts.

Take-Two said Electronic Arts' "highly conditional offer" fails to compensate the company's stockholders for Take-Two's portfolio of intellectual property and revitalization initiatives.

On March 26, Take-Two's board of directors recommended that the company's shareholders not tender any of their shares to Electronic Arts.

Take-Two also announced the adoption of a stockholders rights agreement in response to the Electronic Arts offer to protect stockholders against unsolicited attempts to acquire control of the company.

It was previously reported that the board said it will explore alternatives to maximize shareholder value, which could include a business combination with third parties or with Electronic Arts or continuing as an independent company.

Take-Two's board said it would be prepared to engage in discussions with third parties, including Electronic Arts, following the release of Take-Two's Grand Theft Auto IV video game on April 29. Prior to the release of Grand Theft Auto IV, Take-Two said it willing to enter into confidentiality agreements and begin preliminary conversations with interested parties.

A second request for information from the Federal Trade Commission regarding the proposed merger extended the Hart-Scott-Rodino waiting period until 10 days after Electronic Arts and Take-Two have "substantially complied" with the request unless voluntarily terminated or terminated sooner by the FTC, an April 17 8-K filing with the Securities and Exchange Commission said.

Take-Two also has been contacted by the German Federal Cartel Office regarding competition issues related to Electronic Arts' tender offer and plans to fully cooperate with the German agency, the filing said.

Electronic Arts, located in Redwood City, Calif., and New York-based Take-Two are interactive entertainment software companies.

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