Gamertell

Electronic Arts is fighting to stay on top of the video game industry after Vivendi finalized its acquisition of leading publisher Activision in December, 2007, paving the way for the formation of a new company Activision-Blizzard. When the two finally merge later this year, it will become the largest purely game publisher in the world.

EA has decided the best way to preserve its ascendancy by making a big acquisition of its own - or, at least, trying to. The publisher announced on Sunday (February 24, 2008) that it has placed a $2 billion acquisition-bid for Take-Two Interactive at $26 per share. Take-Two rejected the offer, posting a response on its site.

EA also released excerpts from the offer letter (dated February 19, 2008) written by its CEO John Riccitiello to his Take-Two counterpart Strauss Zelnick:

“Dear Strauss, I am disappointed that you have rejected Electronic Arts’ $25 per share cash offer to acquire Take-Two Interactive Software…and declined to engage in the friendly negotiations we proposed. We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents, and we remain interested in acquiring Take-Two. So to further demonstrate our seriousness and encourage you to move forward now, I am writing to increase EA’s offer to acquire all of the outstanding shares of Take-Two to $26 per share in cash.”

As you can clearly see, the letter has made startling revelations about a previously unknown takeover bid of $25 per share. If Riccitiello termed the previous bid “friendly” then this revised bid can only be taken as a hostile bid, as EA has made the offer letter public in a move to pressurize Take-Two’s management into accepting the bid. EA is offering nearly 65% more than the current market price of Take-Two’s shares, which stands at $17 per share, and Take-Two stockholders might find the offer too hard to resist.

Take-Two is banking upon the upcoming blockbuster title, Grand Theft Auto IV, which will release on April 29, 2008. EA’s CEO warned Take-Two that after GTA IV, it will have to depend on “less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.” Riccitiello had set February 22, 2008 as the deadline for Take-Two to decide on the bid.

Read [Cnet] Also Read [NY Times]