The long running saga of video game publishing giant EA's proposed acquisition of fellow publisher Take-Two Interactive has come one step closer to conclusion with the new that the Federal Trade Commission has got no problem with it.
The Wall Street Journal reports that the FTC wrote a letter to both companies saying it saw no reason to stick its nose into the deal, but EA has yet to make an offer that the Take-Two board finds acceptable. Among Take-Two's titles is the hugely successful Grand Theft Auto series.
Apparently John Riccitiello, CEO of EA, and Strauss Zelnick, executive chairman of the Take-Two board, spent last weekend discussing how the matter could be concluded. This resulted in an agreement to let EA's previous offer of $25.74 per share in cash expire in return for a management presentation from Take-Two under confidential conditions.
This was formally suggested by Zelnick in a letter to Riccitello last Friday. The EA CEO replied in writing the following day as follows:
"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."
On the same day Zelnick made the following comment in a press release: "We welcome EA into our formal process and look forward to demonstrating to their Board the significant strides made by Take-Two since they last undertook a detailed review of our business in early 2007. Our Board remains unwavering in its belief that EA's unsolicited conditional tender offer of $25.74 per share was inadequate and undervalued Take- Two's world-class entertainment franchises and our strong operational and financial performance."
So there's progress, but none of this necessarily means the deal will be done. Investors seem reasonably unmoved by the news. Take-Two's share price is currently $24.5, having finished last week at close to $25, but dropped to below $23 on Tuesday. EA's is around $47, having finished about a dollar higher last week.
Further reading: HEXUS.sharewatch: Sony and EA take a beating