EA Ends Pursuit of Take-Two

Electronic Arts (EA) has decided seven months is enough. It has decided to end its pursuit of Take-Two Interactive, which began --- and was rejected --- in late February.

In August, EA let its tender offer for Take-Two expire, but the company remained interested. The two companies continued discussion in private.

On Sunday, EA issued a press release which says discussions are terminated, once and for all. The release was very brief, and said the following:

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Electronic Arts Inc. (“EA”) (NASDAQ:ERTS) today announced that while EA continues to have a high regard for Take-Two’s creative teams and products, after careful consideration, including a management presentation and review of other due diligence materials provided by Take-Two Interactive Software Inc. (“Take-Two”) (NASDAQ:TTWO), EA has decided not to make a proposal to acquire Take-Two and has terminated discussions with Take-Two.

John Riccitiello, Chief Executive Officer of EA, said: “EA is tracking toward a record breaking year. We’re launching 15 new games including award-winners like SPORE, Dead Space and Mirror’s Edge, great new titles from the Sims, new family titles with Hasbro, and the highest quality slate of EA SPORTS titles on this generation of consoles. We’re also expanding beyond our core business with a series of direct-to-consumer launches including Warhammer Online.”

Take-Two responded quickly, with the following similarly terse statement:

NEW YORK--(BUSINESS WIRE)--Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today responded to Electronic Arts Inc.’s (NASDAQ:ERTS) announcement that it does not intend to pursue an acquisition of Take-Two at this time.

Strauss Zelnick, Chairman of the Board of Take-Two, commented, “We remain focused on creating value for our stockholders and our consumers. 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. We’re especially proud of the success we’ve enjoyed over the past eighteen months and we remain confident in our ability to generate value for stockholders.”

“Take-Two’s business has continued to strengthen since the time EA first made its offer. We have delivered terrific products to our consumers and we’ve been rewarded with very strong financial performance. We have an exciting future ahead of us, powered by our profitability, a significant cash position, the absence of debt, an undrawn credit facility and a terrific lineup of games. We are confident in the unique value of our business given our strong position in what is a growing and dynamic industry,” said Ben Feder, Chief Executive Officer of Take-Two.

Take-Two had said from the start that EA's offer undervalued the company; it also stated after the initial offer that it would be willing to talk after the launch of Grand Theft Auto IV. While EA continued its pursuit, the deal never came to fruition.

However, the above statement that "we remain actively engaged in discussions with other parties in the context of our formal process to consider strategic alternatives" seems to indicate that even if EA has dropped its bid, other parties remain interested, and Take-Two isn't averse to a suitor, for the right price.

With the holiday season upcoming, and companies beginning to focus on games sales and promotions, it's unlikely any deal would take place until next year, if then.