Well, it looks like mammoth game-publisher Electronic Arts (ERTS) is easing off from its $2 billion takeover bid over Take-Two Interactive (TTWO). You can check out the New York Times update here. If you aren't familiar with either of these publicly traded video gaming companies, they're both very large players in the field. EA is the clear giant here and is best known for its sports titles. Its flagship franchise is the wildly popular John Madden football series. Take-Two is certainly no push-over either, having grown into a gaming giant off their success of the popular (and controversial) Grand Theft Auto series. So, why does this matter to us more than a pair of walruses fighting in the Arctic? On the money side of things, this provides a great backdrop to explain the basics of a hostile takeover. Several months ago, EA approached Take-Two directly and offered to buy them out at $25.74 per share (or about $2 billion total). Although current share prices were hovering around $24 or $25, Take-Two execs refused the offer, feeling the company had a brighter future on its own and that those share prices would eventually rise above that $26 offer. Having been rejected by company management itself, EA decided to "go hostile" by targeting Take-Two's shareholders directly with the buyout offer. This put Take-Two on defense mode, spurring them to address their shareholders and advise them not to sell. The concept of a hostile takeover is that if EA had convinced enough Take-Two shareholders to sell on their own, they could have gained control without Take-Two's official approval. With the latest extended offer from EA set to expire, it seems the acquisition bid may be over for now since it would be too late for EA to incorporate Take-Two into this year's holiday selling season push. So there you have it. Hostile takeovers explained through video games. Game on! --Peter
EA Sports, If hostile takeovers are in the game, it's in the game. Nice post, never thought that I would actually learn something from a video game.
Thanks Jens. I was wondering how to work in the "It's in the game" slogan.
From what I've been reading, EA's really been moving to strengthen its other genres aside from sports. They recently bought out two very strong independent developers-- Bioware (one of my favorites) and Pandemic.
EA certainly seems like the big fish in the water now, so let's see what happens from here.
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