EA to let Take-Two bid expire, re-evaluate offer

EA's hostile takeover bid for software company Take-Two Interactive is finally set to expire after a series of extensions failed to cull outstanding stock in the company necessary for a takeover.

Nearly seven months after placing its initial bid for the manufacturer of the blockbuster Grand Theft Auto game series, Electronic Arts has made little progress in obtaining Take-Two. For this reason, EA CEO John Riccitello wrote a note to Executive Chairman of Take-Two, Strauss Zelnick which said:

"Given the passage of time, we have to validate the assumptions used in the model to support our offer price of $25.74 per share in cash. In addition, we no longer believe we can integrate Take-Two ahead of the important holiday season. Accordingly, we require due diligence to support a transaction and are therefore letting the tender offer expire tonight. However, we are pleased to accept your offer to review your management presentation as outlined in your letter."

The management presentation Riccitello mentions will contain confidential information about Take-Two's three-year release schedule that is likely to greatly offset EA's acquisition offer, necessitating its expiration. Zelnick mentioned in his reply to Riccitello, "The presentation also includes information about the underlying factors that have driven our strong operational and financial performance. I believe our presentation will enable you to understand better the value of our Company to EA."

This actually looks to be quite a feint by Take-Two, with EA dropping its hostile takeover bid to hear Take-Two's pitch for why it is worth more money, and claiming it needs due diligence, or a re-evaluation of potential risks in changing its offer.