March 26, 2008 9:14 AM PDT

Memo to EA and Take-Two: Stop using the press to negotitate

Posted by Daniel Terdiman

Dear Take-Two and Electronic Arts: I'm not an arbitrator. And neither are my colleagues who cover video games.

I know it's nothing new in the fast-paced world of hostile takeovers, tender offers and other forms of mergers and acquisitions, but it's beyond obvious that both Take-Two and EA are using the press--and our outreach to the public--to try to negotiate the best terms in whatever marriage the two eventually end up in.

Much of the belly-aching around the timing and the pricing of any takeover of Take-Two by Electronic Arts has to do with the forthcoming release of 'Grand Theft Auto IV,' and the huge sales it will likely produce.

(Credit: Take-Two Interactive)

First they worked on a possible deal behind the scenes and when EA didn't hear what it wanted from Take-Two, they took their offer public. Take-Two didn't like the money that was put on the table, so they pushed it away. EA made a hostile tender offer. Take-Two's board now urges shareholders to reject it. And on and on and on.

Nothing's really changed: EA wants to pay less; Take-Two wants more. EA wants to close the deal before Grand Theft Auto IV is published. Take-Two thinks it can hold EA over a barrel because of the game's forthcoming release.

Yet everyone seems to agree that one way or another, Take-Two needs to get bought and that EA is probably a good buyer.

I'm reading reports on the kerfuffle in which respected video game industry analysts say Take-Two has to take the offer or it'll be too late. Or maybe they don't, because EA will extend the date of the expiration of their tender offer. Or maybe Microsoft will come in and buy both companies since they don't seem to be making much progress on gobbling up Yahoo. Okay, I made that last one up to see if you were paying attention.

But basically, I just want to tell EA and Take-Two and every other set of companies that decides the best way to achieve their selfish takeover goals is to use the press that, well, I don't want to be used.

These companies are masterful at putting out self-serving releases that they know reporters will swallow, and then they refuse to make executives available for any kind of follow-up questions. I don't expect anything to change because of this rant, but come on: Stop using the press to try to achieve what you should be doing on your own. Get your highly-paid keisters into a meeting room. Order some takeout. Lock the doors. And work this out yourselves.

Update (12:36 p.m. PDT): Wellll, at the risk of being the mouthpiece I've said above that I don't want to be, here's EA's statement on the Take-Two board's rejection of the hostile tender offer:

"It is regrettable for stockholders that Take-Two's board of directors has not accepted EA's offer. EA believes that a combination of EA and Take-Two is in the best business interest of all parties.

"EA's offer price of $26 per share is full and fair, and reflects the value of Take-Two's intellectual properties, talent, and operational progress. EA's all-cash, tender offer commenced on March 13 is the most certain way to create stockholder value, and represents a 64 percent premium over Take-Two's closing stock price on February 15, the last trading day before EA sent its revised proposal to Take-Two.

"EA's tender offer is a clear process for Take-Two stockholders to maximize the value of their investment. By advising its stockholders to reject the offer, Take-Two's board is exposing them to further delays which may reduce the value and the certainty of a potential transaction.

"EA's tender offer is currently scheduled to expire on April 11, 2008."