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Citing Integration Issues, EA Backs Away From Deal
The entertainment titan’s offer for Take Two could resurface, but lagging discussions have pushed M&A’s impact beyond the holiday season.
August 18, 2008
Electronic Arts has temporarily suspended its $2 billion pursuit of Take Two Interactive, citing integration issues in the near-term as being impetus for holding off.
Monday, EA’s offer will expire, although the two companies will continue talks.
In a letter to Strauss Zelnick, executive chairman of Take Two’s directors, John Riccitiello, chief executive of EA, said Monday: “we no longer believe we can integrate Take Two ahead of the important holiday season,” and, because of this, “we require due diligence to support a transaction and are therefore letting the tender offer expire tonight."
Take Two is going to present management with intimate details of the company’s operational projections, Zelnick said to Riccitiello in a letter sent over the weekend. This marks a significant shift from Take Two’s initial stance; the publisher of the tremendously successful “Grand Theft Auto” series first rebuffed the takeout bid, calling EA’s offer too low.
On the news, Take Two stock took a hit, falling about 3%, to $24.17 in late morning trading. EA’s stock fell, slightly, to $47.84 around that same time.
Morgan Stanley is acting as the dealer manager for the tender offer, Simpson Thacher & Bartlett LLP and Latham & Watkins are acting as legal counsel, and Georgeson Inc. is acting as information agent for the tender offer.
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