EA allows Take-Two bid to expire

Five-month-old $2 billion offer for GTA publisher likely to end

By Danny King -- Video Business, 8/18/2008

AUG. 18 | Electronic Arts said today that it will let its $2 billion bid for Grand Theft Auto publisher Take-Two Interactive Software expire at midnight tonight, marking what’s likely the end of an almost six-month effort to merge the two games companies.

“We no longer believe we can integrate Take-Two ahead of the important holiday season,” Electronic Arts CEO John Riccitiello wrote to Take-Two chairman Strauss Zelnick in a letter dated today.

Electronic Arts also said today that it would review a management presentation from Take-Two as part of its due diligence.

Electronic Arts has been trying to buy Take-Two in an effort to gain greater market share of a videogames industry in which U.S. sales of hardware and software through the end of last month jumped 35% from a year earlier to $9.47 billion, according to NPD Group. Take-Two’s Grand Theft Auto IV title set one-day and first-week all-time records for videogames after its April 29 release.

Shares of Take-Two, which has repeatedly rejected Electronic Arts’ bid, fell about 4% today to less than $24 a share.

“We do not anticipate any tendered shares will be accepted, due to the failure to meet various conditions of the tender offer,” Wedbush Morgan analyst Michael Pachter wrote in a note to clients today.

Electronic Arts was overtaken as the world’s largest videogames publisher last month when Vivendi’s games unit completed its $9.85 billion acquisition of Activision, creating Activision Blizzard.

“Our board remains unwavering in its belief that EA's unsolicited conditional tender offer of $25.74 per share was inadequate and undervalued Take-Two’s world-class entertainment franchises and our strong operational and financial performance,” Zelnick said in a statement today.