FEB. 24, 2008 • Take-Two Interactive rejected a $2 billion ($26 per share) acquisition offer from Electronic Arts. The offer was 64% higher than the Feb. 15 closing price. EA had previously offered $25 per share. Take-Two’s board of directors rejected the tender by arguing the offer undervalued the publisher, which is set to release Grand Theft Auto IV, the next installment in the hit series, which has sold more than 66 million units worldwide, in April. Undeterred, EA made the takeover attempt hostile on March 13 by taking the $26 per-share offer directly to Take-Two shareholders.

Impact: It seems clear that many Take-Two shareholders are willing to sell but would like to hold out for a higher price. From Electronic Arts’ perspective $2 billion is a relative value. EA would eliminate some competition in the sports game market and acquire the MLB license they have been locked out of. Given how popular game franchises now are showing the ability to generate over $1 billion a year, the Grand Theft Auto brand alone may be worth the price. Finally EA’s acquisition would prevent competitors from acquiring Take-Two. Most importantly all these goals can be accomplished in a hostile takeover, without the cooperation of current management.