EA Gets a Loan for T2 Takeover War Chest; Pachter Explains What it Means

May 10, 2008 -
Electronic Arts issued a press release late yesterday announcing that it had secured a line of credit of up to a billion dollars to fund its hostile takeover bid for Take-Two Interactive.

The money will come from Morgan Stanley, the Bank of Nova Scotia and several other financial institutions.

With GP challenged by balancing his checkbook, we turned to Wedbush-Morgan analyst Michael Pachter (left), who explained what EA is up to:
It is something that should be expected.  After [the acquisition of] Pandemic/BioWare, EA has only around $1.7 billion in available cash... The Take-Two deal is around $2.1 billion... so they’re short.  They also probably need around $400 million in available cash for working capital needs, so they need to raise around $800 million to complete the deal.  The extra $200 million is just a cushion, although I suppose it could be construed as how much higher they’re willing to go [for Take-Two]...
 
The timing isn’t particularly unusual, a bit later than I would have thought, as they should have started the process on March 13 (when they went hostile).  However, I have no experience in credit markets like we’re experiencing now, so maybe it’s normal to take 8 weeks to get something like this done.  It’s also possible that they waited for their new CFO [Eric Brown] to start in order to allow him to negotiate terms...
 
I would not read any significance into the filing, other than to say that if they want to raise their offer price [for Take Two], they will likely need a higher credit line...

Comments

Interesting that a Canadian bank is financing the deal. We haven't been hit as hard with the credit crunch up here...

Well looks like GTA IV will be the last good GTA and say bye bye to Manhunt 3. It will get Thrill Kill'd by EA. :(

If EA does go under, wouldn't that make their licensing deals null and void? Specifically the NFL one where 2K can go back to making the good games.

What about all the "penises and vaginas" in Sims 2. Also It's ability to show pedophiles naked children parts and the "patch" that takes the blur away to show "full intercourse".
JT and EA have had their share of feuds in the past. I think that EA might bend a little more to political pressure. Hopefully whatever members of T2 that remain stand strong in the games they produce.

Why cant EA face it. They are not going to win and nobody likes them.

Message to EA: LEAVE T2 ALONE DAMN IT!

Just because EA has acquired a line of credit to help buy Take 2, that doesn't mean they'll succeed at doing so. This is just them keeping the issue in the spotlight. There's still FTC competition concerns they have to deal with (not that the FTC has ever really cared about maintaining competition) and when they tried to get a hostile vote at Take 2's last shareholders meeting, they got less than 10% of the votes they needed. Right now Take 2 shareholders don't believe being bought by EA is a good deal, particularly when GTA4 is selling even better than they predicted. Pachter says it's inevitible but he's also been wrong as much as he's been right. Just because gaming sites keep giving him attention doesn't mean it's going to happen.

@Jack Thompson, Attorney

You really are just a jerk.

Little more than a /b/tard

@Freyar

What I do take offense to is that she doesn’t take the approach of a parent and actually put a limitation on her son’s renting habits.

Huh? As far as I can tell, he wanted to buy it, she was willing to let him rent it and take a look at it. Presumably once she looked at it and decided she didn't like it, it went back to the rental store after the rental time was up and that was that.

Seems fairly reasonable to me, rent it check it out, and at least let her son conclude the story before returning it. The only stupid part is then proceeding to complain about game equivalent to crime movies like the Godfather, or TV shows like the Sopranos.

Well, at least I know now what ending to go for when I play GTA IV whne it coes out on PC (hopefully). I think I'll let go for the one where Niko's cousin buys it. I'd rather keep my girlfriend. Gotta look out for number 1 after all. ;)

three things I like most about GTA 4

Doing anything with Packie, especially when he's drunk and ranting on his tangents.

Brucie. I don't need to say anymore.

Lil' Jacob. One love.

BANE XXIII

Minneapolis, MN

[...] wrote an interesting post today onHere’s a quick excerptElectronic Arts issued a press release late yesterday announcing that it had secured a line of credit of up to a billion dollars to fund its hostile takeover bid for Take-Two Interactive.The money will come from Morgan Stanley, the Bank of Nova Scotia and several other institutions. With GP challenged by balancing his checkbook, we turned to Wedbush-Morgan analyst Michael Pachter (left), who explained what EA is up to: It is something that should be expected.  After Pandemic/BioWare, EA has only around $1.7 billion in available cash… The Take-Two deal is around $2.1 billion… so they’re short.  They also probably need around $400 million in available cash for working capital needs, so they need to raise around $800 million to complete the deal.  The extra $200 million is just a cushion, although I suppose it could be construed as how much higher they’re willing to go…   The timing isn’t particularly unusual, a bit later than I […] [...]

I hope they fail somehow.

For a while i thought EA was slowly changing thier ways, but the recent mass effect/spore DRM fiasco has shown them to be back to thier evil ways.

EA taking over T2 would be bad for everyone except shareholders. EA will certainly mess around with GTA to some degree, whilst giving themselves total monopoly over sports games.

Will the last person to leave Rockstar please turn the lights off?

$1,000,000,000.00

Why do I picture the CEO of EA with his pinky finger up to his mouth... you know... Dr. Evil style.

I think from Take Two's stockholder view, I wouldn't sell anything until the GTA4 sales slow down.

@ koichan

I hope they fail to acquire T2. I hope they don't acquire them and then fail.

DammitDammitDammitDammitDammitDammitDammitDammitDammitDammitDammitDammitDammit...

I agree with Koichan. EA was starting to look better a while back.

I'm going to laugh when EA buys T2 and then goes bankrupt due to their huge debt.

Watch out everybody, get ready for the next video game crash of 1983!

@jb:

That just made my day. xD

@jb

We shall hold the gamers ransom for *dududadadunn* ONE BEELION DOLLARS! /pinky

@DarknessDeku It's as if you read my mind.....with so many taker overs by EA and EA holding a large portion of companies...if EA was to ever go under....we'd be really hurting.

Won't surprise me if EA caves to political pressure easier.

@ Altair

I hate hate hate hate hate hate hate hate hate hate hate hate hate hate hate HATE EA!

@JB

That's exactly what I was thinking!

Man, they can't take a hint can they? EA needs a good swift kick in the rear.

[...] wrote an interesting post today onHere’s a quick excerptElectronic Arts issued a press release late yesterday announcing that it had secured a line of credit of up to a billion dollars to fund its hostile takeover bid for Take-Two Interactive. The money will come from Morgan Stanley, the Bank of Nova Scotia and several other financial institutions. With GP challenged by balancing his checkbook, we turned to Wedbush-Morgan analyst Michael Pachter (left), who explained what EA is up to: It is something that should be expected.  After [the acquisition of] Pandemic/BioWare, EA has only around $1.7 billion in available cash… The Take-Two deal is around $2.1 billion… so they’re short.  They also probably need around $400 million in available cash for working capital needs, so they need to raise around $800 million to complete the deal.  The extra $200 million is just a cushion, although I suppose it could be construed as how much higher they’re willing to go [for Take-Two]…   The timing isn’t particularly unusual, […] [...]

Does this mean Jack thompson is going to go after EA now instead of take-two.

Quick Jack find and befriend a lawyer who knows the monopoly laws in this country unless you want take-two to be a lot harder to get rid of.

@Father Time

Actually, I think he knows EA's track record of ruining whatever they acquire, so he was openly advertising he'd be trying to influence the shareholders.

After bioshock was so much BS and chips let them have TT
>>

Can we ban the 1gamezone.net spam bot already?

..
though I do believe JT's first comment toward EA will be "Now that you've acquired Rockstar, you know what you must do". To which EA's response will be along the lines of "Make tons of money off it!"

i can see it now... Grand Theft Sims...

ick....if they do it, i'm never buying EA again...

@JohnnyD

Also, the Canadian banks are doing a lot better because of how strong the Canadian dollar is versus the American dollar. If the dollar gets stronger by the time the loan is paid off, the Canadian bank will be making tons of money off of this.

I think EA might be good in the long run for gta.

now hear me out first. EA has been known to get this FIGHT for ther franchises. this means whenever jack,lee or ptc, bullshit them. they will be stomped. and ricctello says all the shit probst did was bad and he won't censor games. I mean look at army of two. every other word was fuck.
also take two rearly defended rockstar. I still dislike EA but the enimye of my enimie is my friend. sorry for the spelling I am sick.

Rockstar Games - think about what your product is
By Susan Estrich
Published: May 7 2008, 11:42 PM
Category: Opinion
Topics: Column, Susan Estrich [Campaign Chairman for Dukakis for Pres.]

Rockstar is the name of the company that is rolling wheelbarrows of money to the bank this week, projected to rack up something on the order of $400 million in revenue from the sale of six million copies of its newest video game sensation, Grand Theft Auto IV.

Between a rock and a hard place is more like how I feel, as the mother of a gamer. So far, they only have a few dollars of my money (or Blockbuster does, anyway), since my deal with my son was to rent, not buy. But there’s no question that our reviews of the latest in this infamous series are not in sync.

He thinks it’s a great new game.

I write for a living and still have difficulty finding the words to describe it. Awful doesn’t begin to do it. From what I’ve heard about the ending (and this is one ending I really would love to spoil), you win by becoming the No. 1 mobster, even if your whole family dies in the process. In one version, so I’m told, your cousin and his bride die in a drive-by shooting at their wedding. In another, your girlfriend gets killed. At least this one doesn’t declare war on all Haitians (which an earlier installment in the series did, until the Haitian community complained), but it’s all about killing, including killing police officers.

Imagine gratuitous violence. Then imagine people with more imagination than you or I have making it more graphic and awful than we could ever dream, and you’re on your way to this new blockbuster entertainment.

A mother I know and respect told me some years ago that if you want your kids to follow your rules, don’t make too many of them, make clear that “no” is really “no,” and as for the rest, go for honesty and communication. I remember asking her what was on her “no” list. She said, three: heroin, cigarettes and motorcycles without helmets. I have a few more than that, but having seen the way kids get around their parents’ bans on video games, Internet content, etc., I’ve settled for full disclosure rather than absolute bans in those departments.

Trying to prove that video games cause violence is a bit like trying to prove that pornography causes crime against women or even that the death penalty deters crime. Figures don’t lie, but people do — and they manipulate, as well. Most people who look at porn or play violent video games live normal, healthy lives, but that doesn’t mean they’re good for you. You can find states that have the death penalty and high murder rates, and states that don’t and have much lower murder rates.

I’m old-fashioned enough to believe in personal responsibility. So, when someone commits an act of violence, I blame the person and believe they should be punished, regardless of deterrence. I do not blame the game they played or the Web site they visited. I also believe in the First Amendment, for adults anyway, which means that it’s not the business of government to tell people what has artistic value and what doesn’t. Kids, on the other hand, are another matter. We’re all responsible for them.

It’s not my son I’m really worried about. He does well in school, follows the important rules and generally gets bored with most video games before they get in the way of life. It’s his generation, the generation that he is going to grow up in and live with, full of kids who take this stuff for granted and spend more time with it than with real life, that worries me. It’s the genius that is being distorted into creating more and worse violence. There’s no question that great minds are behind these games, in terms of creative and technological skill, but think of what else they could be doing. And aren’t.

It’s a shame and a waste, and it portends a generation going down the tubes. “Rockstar,” my you-know-what. Shame on you. You owe the kids who worship you — and line your coffers — better than this garbage.

Susan Estrich is a nationally syndicated columnist.

@ Jack Thompson's Article

Susan Estrich admits that games don't cause violence, but she is still scared that it will "ruin" her son? Not very credible.

What is that, JT?

Oh, and thanks for spoiling the ending. I already finished it thankfully, but people who haven't may not be happy.

@DarknessDeku

Yeah, what's up with that? A little contradictive isn't it?

...I'm trying to find some sort of point in Jack's post.

But seeing as how I am a well-adjusted, logical human being, I'm having difficulty.

Damnit EA, stop being a bunch of tits. No one wants you lording over all of gaming.

Also, GTA Vice City did not "declare war on all hatians". In the game there was text that said "Kill all the Hatian dickheads". This was only refering to IN-GAME hatian GANGSTERS. The Hatian community sorta over-reacted. Also, regarding all the tragedy the character Niko Bellic goes through, tragedy is an important part of any story. It makes a person feel for the character, sort of like in The Godfather or The Sopranos.

Oh and most importantly, what did Jack's post have to do with the EA story? Seems like he just wanted to spoil GTA IV's ending. Sick bastard...

One last thing to add to JT's post, regarding "we're all responsible for children", this Estrich woman meant that we're all responsible for our OWN children, right? I am not responible for other people's children, DAMNIT!

Once again, Mr. Thompson, you exhibit your selective reading skills. I won't bother pointing them out because i know you have more important things to do. (Probably send three more harrassing letters to Judge Tunis by the end of the day, right?)

Oh, and stay on topic. This article has nothing to do with GTA4.

"I write for a living and still have difficulty finding the words to describe it. Awful doesn’t begin to do it. From what I’ve heard about the ending (and this is one ending I really would love to spoil), you win by becoming the No. 1 mobster, even if your whole family dies in the process. In one version, so I’m told, your cousin and his bride die in a drive-by shooting at their wedding. In another, your girlfriend gets killed."

It's called having a STORY. What, you'd prefer that stories never have ANY person die, ever? Stories would become incredibly bland without that, you know. It's motivation for your character to get back at the gangsters that killed their friends and family. Damn, a ten-year-old can understand that even without the violence itself being showed, just the context. I guess NBC should stop running Law & Order because of certain instances where there are drive-by shootings, because the children 'deserve better.'

"At least this one doesn’t declare war on all Haitians (which an earlier installment in the series did, until the Haitian community complained), but it’s all about killing, including killing police officers."

Not this crap again... i'm not even getting into it. Context, people, CONTEXT.

@ Jack

Off topic slightly arent we?

The guy above me is right it is essentially an interactive crime fable, so of course the cops are gonna show up at some point, but because its interacive you don't always have to shot your way out! (Any way why get so uptight over non real police men?)
Oh please no more spoliers Jacky soon to be disbarred Attorney.

What a fucking douchebag. Glad I saw the words GTA4 ending and immediately scrolled down...and the douchenozzle wonders why no one likes him, aside from being an absolute prick in general.
 
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Cheater87Look what FINALLY came to Australia uncut! http://www.gamespot.com/articles/left-4-dead-2-gets-reclassified-in-australia/1100-6422038/?utm_source=gamefaqs&utm_medium=partner&utm_content=news_module&utm_campaign=hub_forum09/02/2014 - 6:49am
Andrew EisenHence the "Uh, yeah. Obviously."09/02/2014 - 12:53am
SleakerI think Nintendo has proven over the last 2 years that it doesn't.09/02/2014 - 12:31am
Andrew EisenSleaker - Uh, yeah. Obviously.09/01/2014 - 8:20pm
Sleaker@AE - exclusives do not a console business make.09/01/2014 - 8:03pm
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Papa MidnightAnd resulting in PC gaming continuing to be held back by developer habits09/01/2014 - 5:07pm
Papa MidnightI find it disappointing that the current gen of consoles is representative of 2009-2010 in PC gaming, and will be the bar by which games are released over the next 8 years - resulting in more years of poor PC ports (if they're ever ported)09/01/2014 - 5:06pm
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Papa MidnightPeople fear and attack what they do not understand.09/01/2014 - 4:04pm
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Andrew EisenSleaker - No. No, not even remotely. The pic attached to my tweet was not made by me; it's not a statement I'm making. It's an illustration of the complete misunderstanding of the issue my tweet is referring to.09/01/2014 - 3:13pm
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