Here fishy, fishy: EA proposal potentially seductive, Take-Two merger possible?

Here fishy, fishy: EA proposal potentially seductive, Take-Two merger possible?  - Image 1Don’t panic: Take-Two officials have turned down Electronic Arts‘ offer, and it has remained that way for the moment. But further investigation into the superstar publisher’s efforts to acquire Take-Two Interactive has unearthed an official document proposing the recent deal. And the proposal has outlined potential factors aimed at Take-Two’s uneasy investors which might actually convince them to support the acquisition – from a profit-business perspective. More at the full story.

Here fishy, fishy: EA proposal potentially seductive, Take-Two merger possible?  - Image 1

Even as we while away the shockwaves wrought by Electronic Arts, new developments continue to surface from the press waves. Located in the conspicuously named domain was an official electronic document with EA’s name on it, which was designed as a companion to a conference call regarding the recently reported planned acquisition.

And the 17-page proposal, obviously published in light of Take-Two’s refusals back in February 15 and 19, aims to enlighten third parties and, after reading the proposal thrice over, convince Take-Two’s investors of the deal’s advantages.

Take note that it isn’t a formal proposal to acquire Take-Two, however, as the offer was set upon the table as far back as February 16. This document only wished to tell investors that:

  • EA and Take Two will be merged. Take Two’s name will not disappear. Like Activision Blizzard, EA proposes a new title carrying both popular brandsEA Take 2 – thus perhaps the reason behind the new mock domain: (source link below).
  • EA and Take Two will be able to consolidate resources to further games of both companies. EA will gain special talents from Take-Two’s exemplary developer teams at labels 2K Games and 2K Sports, while offering their vast resources and services to elevate Take-Two’s own IPs to new heights. That would include distribution, advertising, marketing, developmental budget, and platform reach.
  • Though the superstar publisher will shoulder all of Take-Two’s current stock options, the merger will prove financially advantageous in the long run – that is, of course, if they’re willing to wait for the accretive non-GAAP gains at 2010.
  • Grand Theft Auto IV will remain relatively untouched, as EA is extremely positive that the highly-anticipated title is complete and already in the polishing stages of the development cycle.
  • EA will acquire both publisher and its underlying IPs and subsequent rights to publish them. So while there are fears surrounding the blatant smothering of brand names (i.e., Grand Theft Auto 2010, Manhunt 2009), it will also bring other hopeful IPs up to the next-generation development table. X-COM, a turn-based strategy franchise of cult-following proportions, is among those tucked away.

The document also outlined the direct financial advantage of the deal, which was the profit to gain from the merger. Officially, EA offered to buy all of Take-Two Interactive‘s shares at US$ 26 per share, totaling to approximately US$ 2.0 billion. That amount was initially packed with 60% premium over the shares’ actual market worth.

But the recent revelations have spurred investors to hoard over Take-Two’s stocks in efforts to gain from the possible merger. It’s no surprise either, as anyone could point out to you that Take-Two’s share worth was the cheapest way to partake in the merger dynamics (and thus, profit from it). As a result, Take-Two Interactive’s stocks have risen 54.90% to 25.89 since its previous closing at 17.36.

EA may need to readjust their wallets to gain another financial leverage in the deal, because Take-Two is a good position given its recent stock performance this Monday. It’s steadily wavering, however, signaling a certain uneasiness on the market as to whether the merger will actually pull through or not.

In other notes, Electronic Arts‘ stock remains marginally steady. More on the business side of games as we get them.

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