Electronics Arts No Longer Tendering for Take-Two
Dear Strauss, with great respect...
It's a love fest of mutual respect and admiration between GTA IV publisher, Take-Two Interactive and Electronic Arts. Letters passed between the two company's CEOs today and yesterday indicate that there might some room to 'move forward' together, but basically, Electronic Arts has finally admitted defeat in its $25.74 (£12.50) per share bid to acquire Take-Two.
In a letter to T2's headman Strauss Zelnick dated today (the date on which the latter's bid was due to expire), EA's CEO John Riccitiello says, "As discussed on Friday, 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. "
This follows a note sent by Zelnick on August 17th, which related to a management presentation to parties interested in working with (or taking over) Take-Two. It is full of come-ons to EA including:
"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."
and...
"Prior to the management presentation, we will only require EA to enter into a confidentiality agreement. The agreement would be limited to provisions required to comply with federal securities laws and to ensure the Company’s ability to protect the confidentiality of the information shared with you. I can assure you that this requirement is the same as or more favourable to EA than that which we have employed with all other participants in the process."
Our bold. The full texts of both letters are included below and can be found at Take-Two's own site here.
Letter From Electronic Arts
August 18, 2008
Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012
Dear Strauss:
Thank you for taking my call on Friday and for your response letter on August 17, 2008.
As discussed on Friday, 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.
We continue to have great respect for Take-Two’s creative teams and products and are hopeful that we can work together to reach a mutually agreed transaction.
Sincerely,
/s/ John Riccitiello
John Riccitiello
Letter from Take-Two
August 17, 2008
Mr. John S. Riccitiello
Chief Executive Officer
Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, CA 94065
Dear John:
Thank you for your recent expression of interest for Electronic Arts Inc. (“EA”) to participate in Take-Two Interactive Software, Inc.’s (the “Company”) formal process to evaluate the Company’s strategic alternatives. As you know, we have been willing to have EA participate in this process following the successful launch of GTA IV, and we are happy to include EA now.
As I mentioned when we spoke on Friday, our process begins with an in-depth management presentation. The Company has made significant strides since EA first expressed interest in the Company and this presentation includes material non-public information to which you would not otherwise have access, including information relating to our three year product release schedule and management’s financial projections. 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.
Prior to the management presentation, we will only require EA to enter into a confidentiality agreement. The agreement would be limited to provisions required to comply with federal securities laws and to ensure the Company’s ability to protect the confidentiality of the information shared with you. I can assure you that this requirement is the same as or more favorable to EA than that which we have employed with all other participants in the process.
We understand that a number of months have passed since you first expressed interest in the Company and, accordingly, we will act quickly to assist you in moving through our process. Once we execute a confidentiality agreement, we are prepared to schedule the management presentation immediately.
With my best personal regards.
Sincerely,
/s/ Strauss Zelnick
Strauss Zelnick
Executive Chairman of the Board
In a letter to T2's headman Strauss Zelnick dated today (the date on which the latter's bid was due to expire), EA's CEO John Riccitiello says, "As discussed on Friday, 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. "
This follows a note sent by Zelnick on August 17th, which related to a management presentation to parties interested in working with (or taking over) Take-Two. It is full of come-ons to EA including:
"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."
and...
"Prior to the management presentation, we will only require EA to enter into a confidentiality agreement. The agreement would be limited to provisions required to comply with federal securities laws and to ensure the Company’s ability to protect the confidentiality of the information shared with you. I can assure you that this requirement is the same as or more favourable to EA than that which we have employed with all other participants in the process."
Our bold. The full texts of both letters are included below and can be found at Take-Two's own site here.
Letter From Electronic Arts
August 18, 2008
Mr. Strauss Zelnick
Executive Chairman of the Board of Directors
Take-Two Interactive Software, Inc.
622 Broadway
New York, NY 10012
Dear Strauss:
Thank you for taking my call on Friday and for your response letter on August 17, 2008.
As discussed on Friday, 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.
We continue to have great respect for Take-Two’s creative teams and products and are hopeful that we can work together to reach a mutually agreed transaction.
Sincerely,
/s/ John Riccitiello
John Riccitiello
Letter from Take-Two
August 17, 2008
Mr. John S. Riccitiello
Chief Executive Officer
Electronic Arts Inc.
209 Redwood Shores Parkway
Redwood City, CA 94065
Dear John:
Thank you for your recent expression of interest for Electronic Arts Inc. (“EA”) to participate in Take-Two Interactive Software, Inc.’s (the “Company”) formal process to evaluate the Company’s strategic alternatives. As you know, we have been willing to have EA participate in this process following the successful launch of GTA IV, and we are happy to include EA now.
As I mentioned when we spoke on Friday, our process begins with an in-depth management presentation. The Company has made significant strides since EA first expressed interest in the Company and this presentation includes material non-public information to which you would not otherwise have access, including information relating to our three year product release schedule and management’s financial projections. 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.
Prior to the management presentation, we will only require EA to enter into a confidentiality agreement. The agreement would be limited to provisions required to comply with federal securities laws and to ensure the Company’s ability to protect the confidentiality of the information shared with you. I can assure you that this requirement is the same as or more favorable to EA than that which we have employed with all other participants in the process.
We understand that a number of months have passed since you first expressed interest in the Company and, accordingly, we will act quickly to assist you in moving through our process. Once we execute a confidentiality agreement, we are prepared to schedule the management presentation immediately.
With my best personal regards.
Sincerely,
/s/ Strauss Zelnick
Strauss Zelnick
Executive Chairman of the Board
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