PSP News: EA Proposes to Buy Take-Two/Rockstar for $2 Billion! - PSP News

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EA Proposes to Buy Take-Two/Rockstar for $2 Billion!

  Even though it's the weekend, huge news has hit earlier today, all the way from the west. It comes from Electronic Arts in their Redwood City, California headquarters. EA has announced that they've made Take-Two Interactive a buy-out proposal - yes, that's right, a buy-out. And for how much? $2-billion. This would mean that EA would cough up $26 per each share of Take-2, and that's a 64% premium over what it's actually worth.

   The letter was sent on February 19 of this year. But, it should be noted that the offer was initially rejected by Take-Two Executive Chairman Strauss Zelnick, and so EA has decided to make this affair public, by making the proposal public knowledge, in hopes of having Take-2 shareholders take notice.

   Mr. Riccitiello said today: “Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders. Take-Two’s game designers would also benefit from EA’s financial resources, stable, game-focused management team, and strong global publishing capabilities.”

   The proposal states that Take-2 may never get an offer this big ever again, and that they should reap the rewards now. In other words, cash out early, and don't take the risk. “There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today,” Mr. Riccitiello wrote. Hyperbole? Scare tactics? Fearing Grand Theft Auto IV will cast an enormous shadow over other games all year long? You decide.

   And Grand Theft Auto IV could perhaps be the reason why EA wants Take-2 so bad. It's currently the world's most popular console videogame franchise, and it isn't EA's. In addition to securing Rockstar, EA would also eliminate their biggest competition, the 2K Sports lineup. Because Take-2 owns 2K Sports and 2K Games, this would single-handedly eliminate EA Sports' competition, as 2K Sports publishes MLB, NCAA Basketball, NBA, NHL, and Top Spin (tennis) games.

   Take-2's lineup is only getting stronger, and it would also be a damn shame to see their sports games go. So let's hope they deny the buy-out once and for all, or pair-up with a publisher that isn't Electronic Arts. This industry needs as much competition as possible.

2/24/2008 Arnold Katayev

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