EA ends talks for $2 billion Take-Two buyout

Games publisher first proposed acquisition in February

By Danny King -- Video Business, 9/15/2008

SEPT. 15 | Electronic Arts ended discussions to acquire Take-Two Interactive Software more than six months after EA said it would bid about $2 billion for the publisher of the record-setting videogame franchise Grand Theft Auto.

EA said yesterday that it stopped talks with Take-Two, citing in a statement “a management presentation and review of other due diligence materials.”

In February, EA proposed to buy Take-Two for about $2 billion to take advantage of a booming videogame market. The $26 a share bid was about 60% more than what Take-Two had been trading for during the previous month.

Two months later, Take-Two released GTA IV, which set one-day and first-week all-time records for videogames after it moved more than 10 million copies as of Aug. 16. That title helped boost U.S. hardware and software videogame sales through the end of July by 35% from a year earlier, to $9.47 billion, according to NPD Group. July’s software sales surged 41% to $591.1 million, NPD said.

“We remain actively engaged in discussions with other parties in the context of our formal process to consider strategic alternatives,” said Take-Two chairman Strauss Zelnick in a statement yesterday. “We remain focused on creating value for our stockholders and our consumers. This has been our goal since EA launched its conditional and unsolicited bid six months ago, a bid which was repeatedly rejected by our stockholders.”

EA, which was overtaken as the world’s largest videogames publisher in July when Vivendi’s games unit completed its $9.85 billion acquisition of Activision, said last month that it would let the bid expire.

Take-Two shares plunged 24% today to $16.57, the stock’s lowest closing price since Feb. 20, three trading days before EA made its bid proposal public. EA shares fell 3.8% today to $43.30 a share.