Pachter: EA-T2 Deal Turning from Hostile to Friendly

August 18, 2008 -

As we mentioned in the previous story, EA released some surprising info today:

  • it will not renew its tender offer (expiring at midnight) to buy T2 shares at $25.74
  • EA and T2 have been talking, with T2 preparing a secret presentation for EX execs

For expert analysis we turned to Michael Pachter (left) of Wedbush-Morgan who told GP:

It appears that EA is proceeding with a friendly deal.  The two companies exchanged letters over the weekend, with EA saying the offer price would require review (meaning they are inclined to go lower) because the deal cannot be completed before the holidays.  Take-Two's response was an offer of due diligence, including the presentation of non-public information under a non-disclosure agreement, intended to support a higher value.

 

EA accepted the offer of a presentation, and intends to allow its hostile tender offer to expire.  This merely changes the proposal from hostile to friendly, and keeps the pressure on the FTC to rule by Thursday, as previously expected.

 

My guess is that the parties reach an accommodation shortly at a $1 - 2 premium to EA's current $25.74 offer.  We have said this consistently since February 25, and continue to believe a deal gets done this month.  If Take-Two management holds out for a price in the $30s, EA will go hostile again, likely at a price closer to $20.  If Take-Two management negotiates a price below $27.50, I think a deal gets done.

 

The only surprise to me is that EA agreed to go friendly.  I suppose that they figured it was magnanimous to make the attempt, and Take-Two management recognized that this was its last and only opportunity to affect the outcome.  I really expect the parties to reach an agreement close to the $25.74 price (slightly above).

 

I do not expect EA to be impressed with the presentation, which will include a 3-year release schedule and a list of cost control initiatives, but believe that it will allow TTWO management to save face.  EA is unconcerned about cost control, since it will eliminate most operating expense once Take-Two is integrated, and should not be particularly surprised to learn that GTA 5 and BioShock 2 are planned.
 


Comments

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

stop quoting pachter.  he's a turd burgling cock monkey.

 

excuse my french.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Well remember when EA bought Virgin back in the day? What was the first thing they did? They canceled Thrilll Kill after it had already been completed, packaged,  boxed, and shipped. The stores were told to not open the boxes and return them.

I can see the same thing happening with Manhunt or GTA 5 or even Max Payne 3, maybe not a banning or cancellation. But more of a severe editing makeover not in our favor. Just be prepared for anything.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Of course EA'd go friendly.  There's no downside.  T2 going friendly may be more of a last-ditch effort by management to hold their positions (have those management warrants vested yet?), or it may be a play for time.  Or, it may very well be an excellent bet that the FTC is going to come down on this one with conditions, such as a sports spin-off.  EA gets the non-sports IP and studios, but T2 or a successor entity takes whatever needs to be spun off.  Assuming, of course, that EA wants to push through when confronted with such conditions.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

It's amazing watching Pachter back-pedal, I must admit.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

FTC please block this merger. We'll give you a fruit basket.

---------------------------------------------------- Debates are like merry go rounds. Two people take their positions then they go through the same points over and over and over again. Then when it's over they have the same positions they started in.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

I don't give a fuck about GTA, but I don't want all the people who do to have to suffer because of EA and their goddamn conquest. Oh, and I also believe that Final Fantasy 7 predicted EA's evil rise with their depiction of the Shinra corporation.

 

-Entertainment isn't the reason the world sucks. It's the reason we know the world sucks. For information on games and psychology, look up: Jonathan Freedman(2002)Block & Crain(2007)Grand Theft Childhood, by Harvard researchers Larry Kutner&Cheryl Olson

Reality/////////////////////////////////////Fantasy. Seems like a pretty thick line to me...

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

ironically, Square was with EA for a while around that time

岩「…Ace beats Jack」

岩「…I can see why Hasselbeck's worried about fake guns killing fake people. afterall, she's a fake journalist on a fake news channel」

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

yeah, i had a sick dream of a GTA4/FF7 and a messy shot of Condemned 2 style remix... execpt without the turn based attack b.s.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

two words i think of when i think about EA.... EMASCULATED Arts, its going to make T2 a Strombli (i.e. a bull without balls), to think if JT wanted join in on the hostile takeover too!

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

He did by selling the stock he supposedly had, calling it "overpriced".

Likely had the belief that his selling it would cause a landslide or something

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Remember Ultima? Pretty good 'open' adventure Game.

Then EA bought it. The next release was buggy as hell and seriously damaged the reputation of the series.

I see history repeating itself.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

I am so tired of EA and their constant attempt to gobble up any gaming firm in their site.

Anyone remember when Maxis and Bullfrog were names of companies not just offshoots of the EA monster.

Like someone else said I could care less about their monopoly of sports games, I mean to be honest the best sports games I ever played were Mutant League Football on the Sega, and Blades of Steel/Tecmo Bowl on the NES. I just dont want them to ruin what T2 has going for them right now.

 

 

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

I swore off EA when they cancelled Earth and Beyond...

Sortableturnip's Law: As an online discussion of video game violence grows longer, the probability of a comparison involving Jack Thompson approaches 1

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Hmm, this might possibly be just a presentation to say "We have a good thing going, we do NOT want you messing it up. Good day, and don't let the door hit you on the way out."

As said, in truth, there are really only two parties who want this to happen. EA, and a soon to be disbarred lawyer.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

We have said this consistently since February 25, and continue to believe a deal gets done this month.

No, you've said that it'd go off without a hitch, then you've consistently said that Take Two would cave to EA.

The only surprise to me is that EA agreed to go friendly.  I suppose that they figured it was magnanimous to make the attempt, and Take-Two management recognized that this was its last and only opportunity to affect the outcome. 

No, I'd say this is EA finally realizing months later that their offer simply wasn't good enough. That if they wanted to buy out T2, they were going to have to actually negotiate for it; as opposed to their arrogant buyout offer that clearly the majority of T2 and it's shareholders felt was too low.

I do not expect EA to be impressed with the presentation, which will include a 3-year release schedule and a list of cost control initiatives, but believe that it will allow TTWO management to save face.  EA is unconcerned about cost control, since it will eliminate most operating expense once Take-Two is integrated, and should not be particularly surprised to learn that GTA 5 and BioShock 2 are planned.

1) I'm certain that T2's got more than GTA 5 and BioShock 2 planned. Probably an expansion or two for GTA4, various other games, and I'm certain that EA would be interested in the planned time table for release.

2) Unless EA is planning on firing all of Take Two's staff, they will be concerned about cost controls. Money doesn't grow on trees, and no executive will be willing to pay a high price for a company that doesn't have good measures in place to keep expeditures down.

This isn't a matter of Take Two's management saving face, it's a matter of EA admitting they screwed up and starting on negotiating down Take Two's price like they should have back at the start of May.

-Gray17

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

EA eats and guts another dev house publisher, all is well with the world...

I is fuzzy brained mew =^^=
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Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Not bad blog... Submit feedreader... free pc games

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

This is the same Pachter who said that the deal would go through without a hitch from the very beginning right?  And now he's quoting existing news on a potential deal and acting as if it's his own insider information?  Unreal...

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

The same guy who said the ps3 would fail.  I don't listen to video game analysts that much considering they are so innacurate.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

"The same guy who said the ps3 would fail.  I don't listen to video game analysts that much considering they are so innacurate."

Sony are in last place... accurate enough for me

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Wasn't the the original Xbox leagues behind the ps2? As far as I can see, the only reason the xbox 360 triumphs is based on 3 important things; online multiplayer, a lower sticker price, and a small head start.

I am not saying the the ps3 is better, I love Halo online, just don't act like you know something about a business that tends to change more than the tides...

I could go on but I'd rather not change the subject.

this also includes to everyone who thinks the ps3 over the 360.

Just enjoy playing games on your system, DAMN IT!!

With decent titles, EA sucks as a conglomerate as much as a succubus sucks the life out of men. So there...

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

ps3 vs 360?  meh, nintendo won that fight imo.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Eh, I kinda consider the ps3 a fail, but that's my own personal opinion.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

I considered the 360 better till it rroded.  Kind of like Sony better now because they don't nickel and dime us that much.   

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Damn you EA.  Keep away from Take 2.  I don't want GTA 5 or Bioshock 3 to be developed by some crappy studio just because they want a games more frequently.  I also don't want to pay extra for unlocking weapons and such.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

sorry for the multiple posts.  don't know how i did that. 

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

Copy and Pasted where appropriate:

 

As far as sports games are concerned I couldn't Give f-, I think the only one I have is Fight Night round 3, and thats an EA game, so I won't be too concerned about EA monopolising a scene that doesn't interest me, however if they start putting the hurt on GTA, then I will be angry!

This one still reckons EAPartners is the way to go for smaller developers, you know, keep your friends close and your enemies closer?

 

Your soul is a tasty refreshing treat to ones such as I

chick chick chick chick chickeeeeen lay a little egg for meeeeee!

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

There's gotta be something wrong with T2, there HAS to be.  I would never invite my neighbor, who happens to be my mortal enemy, into my house to check out some of the new underwear I recently purchased for my wife.  The fact that T2 is giving EA a first hand look at their top secrect products is nuts.  So what if EA doesn't bite???  Then what??  Then if you DO have something new and interesting in the works(especially in the sports genre)EA can now plan a way to bite off some of your work!!  I wouldn't do it if I were T2.

Re: Pachter: EA-T2 Deal Turning from Hostile to Friendly

I never would have destroyed everything of mine if I was T2, and bring EA into the house first, then blow it up with EA inside of it....  Maybe that is their plan...  but I don't see how they would do that...

 
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