EA losing its credibility on Take-Two offer extensions
The video game giant's latest extension of its offer demonstrates that its threats and deadlines have little real meaning.
"If you don't clean up your room today, you're going to be in trouble," yells Dad.
"I don't want to," retorts the rebellious teen. "I don't have to."
The day ends, and the next day, Dad says, "This time I really mean it. Clean up your room today, or there's going to be hell to pay."
This is exactly what the dynamic between Electronic Arts and Grand Theft Auto IV publisher Take-Two feels like: EA yells, "We're offering to buy you, but you have to decide by our artificially imposed deadline."
In return, Take-Two does nothing, though in the interim, its new game breaks every short-term entertainment industry sales record. That's sort of like winning the science fair the same night as refusing to clean your room.
And then, just like a parent who has lost credibility for not sticking to his or her guns the first time, EA saidthat it has now decided to extend the deadline for Take-Two's board to accept its $2 billion takeover bid to June 16. Most recently, the offer had expired at 11:59 p.m. on May 16.
In response, Take-Two's board said Monday morning that it was once again rejecting the bid.
This, of course, after an earlier deadline of February 22 had passed and was also extended.
I'm very sure that EA's announcement this morning that Take-Two can still accept its offer had nothing at all to do with the fact that EA desperately wants to own the GTA franchise and get the keys to the bank account with the Scrooge McDuck money bin quantities of GTA IV loot.
Rather, it was couched as a procedural move.
"Extending our offer will allow the (U.S. Federal Trade Commission) review process to continue," said Owen Mahoney, EA's senior vice president of corporate development, in a press release. "EA's offer price remains unchanged at $25.74 per share and our offer is still subject to conditions that include regulatory approval."
Right. To me, this is like Dad saying, "Well, okay, I'll give you another day to clean your room, but only because I'm waiting for Uncle Charlie to decide if your room is clean enough already."
This is becoming rather ridiculous. It's obvious to everyone that EA cannot let Take-Two go, and meanwhile, Take-Two is sitting pretty, counting its new millions.
To be sure, EA had figured in an expected large infusion of cash from GTA IV sales into its original offer. But no one figured on the game bringing in more than $500 million in its first week. Right there, that was a quarter of what EA is bidding for all of Take-Two.
But the offer also did not take into consideration a new movie deal Take-Two signed with Universal Pictures to have its game, Bio-Shock,.
So, Take-Two wants more than the $2 billion EA is offering. Good for Take-Two. I certainly don't have any inside dope on the company's financials and whether or not it can succeed without EA's money, but from here, Take-Two is looking pretty solid right now.
As for EA's new June 16 deadline, I'm thinking that it has all the meaning of, well, its last two deadlines. Which is to say, almost none.
Note: On June 10, Geek Gestalt hits the highways for Road Trip 2008. I'll start in Orlando, Fla., and visit many of the South's most interesting destinations. Stay tuned, and be sure to keep up, both now and during the trip, with what I'm doing on Twitter.