It would have been one of the biggest publishing takeovers in the history of the gaming industry, but it apparently wasn't meant to be: after months of back-and-forth negotiations, EA's long-standing attempt to take over Take-Two has finally come to an end. The company announced on Sunday that it would be ending its pursuit of Take-Two.
In a brief statement issued by EA on Sunday, the company quietly admitted defeat. "After careful consideration, including a management presentation and review of other due diligence materials provided by Take-Two Interactive Software Inc., EA has decided not to make a proposal to acquire Take-Two and has terminated discussions with Take-Two," said EA in the press release. "EA continues to have a high regard for Take-Two's creative teams and products."
Take-Two responded in turn with a statement of its own, a more long-winded rebuttal expressing confidence in the company's brands. "We remain focused on creating value for our stockholders and our consumers," said Strauss Zelnick, Take-Two's chairman of the board. "This has been our goal since EA launched its conditional and unsolicited bid six months ago, a bid which was repeatedly rejected by our stockholders. As part of that commitment, we remain actively engaged in discussions with other parties in the context of our formal process to consider strategic alternatives."
The original offer was made in late February of this year. Take-Two had been suffering at the hands of a shareholder revolt and other internal turbulence: the company appeared to be ripe for the taking. With Grand Theft Auto IV on the horizon, however, the company's leadership was able to convince shareholders to stay the course and hold on to their shares. Shareholders resisted the urge to sell through EA's repeated advances, largely as a result of EA's refusal to raise its offer by any significant amount. After a number of exchanges, all fruitless, EA arrived at this final decision to walk away.
Grand Theft Auto IV was certainly a definitive factor in Take-Two's stand. The original offer, set forth a few months prior to the game's release, was designed to scoop up Take-Two just before the launch of Rockstar's blockbuster game. The intent would have been to absorb the huge financial boon born by the title, which has gone on to sell over 10 million copies worldwide.
But Take-Two shareholders weathered the storm, and the company has been able to fend off EA's advances with little trouble. Though some stray stocks wound up in the hands of the company's uninvited suitor, the fortune from Grand Theft Auto 4 and countless other franchises rests securely in Take-Two's pockets. Take-Two didn't get away unscathed, however. The company's stock has taken a hit following EA's withdrawal, dropping nearly 30 percent in trading on Monday.
As one would expect of the industry's biggest player, the EA war machine continues to chug on. As though unfazed by the defeat at the hands of resilient Take-Two shareholders, the company announced today a new strategic relationship with Eidos to distribute the company's games through the EA Mobile label. In addition, EA has also been forthcoming with its plans to expand into Japan and continues to scoop up some studios and partner with others at a rapidly increasing rate.
Indeed, the loss on the Take-Two front may be just a tiny bump in the road for the gaming monolith. Who knows: it may be only a matter of time before EA comes knocking back on Take-Two's door again—and next time, the company might not have a 10 million unit juggernaut with which to defend its castle walls.
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