If anyone thought that EA was just toying with the idea of buying Take-Two Interactive, think again. To say that the company is getting aggressive is a major understatement. EA has put up a Web site at www.eatake2.com detailing all public statements to Take-Two, and offering a very interesting list of Frequently Asked Questions that attempts to answer what would happen under an EA purchase. The site is obviously aimed at shareholders, not Take-Two’s management, which has already publicly rejected two offers.
One thing EA fails to do is convey that this offer is not hostile, despite what the FAQ says. The company says that the “proposal is friendly to Take-Two shareholders, developers, partners, and customers” and that they “continue to seek a friendly, negotiated transaction.” Of course, the reason I’m categorizing this as hostile is because the FAQ doesn’t mention management at all in this statement; EA probably knows that it has a brick wall there.
If you want a good definition of a hostile takeover, you can’t do better than Investor Words, which defines it as “a takeover which goes against the wishes of the target company’s management and board of directors. opposite of friendly takeover.” That sounds about right.
EA is, at this point, appealing directly to shareholders. Take-Two’s shareholders can be moved to action contrary to management’s position, but with GTA IV waiting in the wings, it’s hard to gauge what shareholders will do. The news of an EA takeover certainly hasn’t hurt the stock price — Take Two’s stock ended the day with a 54.90-percent increase, closing at 26.89 — slightly more than the last offer EA made.
Some other interesting tidbits that should be highlighted from the FAQ: The company says that all of Take-Two’s studios will retain their organizational structure including Visual Concepts, Irrational, Firaxis and Rockstar’s multiple studios. The company also says that Rockstar’s management would work well with EA because many of both companies’ top executives have worked together in the past.
There were a number of questions that the FAQ couldn’t or wouldn’t answer, like EA’s plans for 2K Sports and what it would do with the structure of that label, what it would do with competing 2K sports titles, whether or not it would terminate any Take-Two employees, or get rid of Take-Two as a company altogether.
My personal opinion on the matter is a little different. While it may not matter to shareholders of either company, it should be noted that the most vocal part of the game community at large isn’t all that happy about this news. They are concerned that the games they love will be destroyed by reorganization or eliminated altogether because they compete directly with EA’s top brands. Personally I am concerned with what happens to all these workers, studios, brands and labels in a year or two after the smoke clears and everyone has calmed down. As a victim of multiple corporate mergers I can also tell you that (if this happens) one thing is certain: There will be blood.
We’ll have more information on this story as it develops, but you can get more background information by checking out this story, along with this follow-up story from David Chapman.