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EA: Take-Two deal now "50/50 at best"

Wed 07 May 2008 2:10am GMT / 10:10pm EDT / 7:10pm PDT
Publishing

An EA VP says that Take-Two is not a strategic priority, claiming that the publisher is not desperate

With the latest deadline on its USD 2 billion bid due to expire on May 16, Electronic Arts has piled more pressure on acquisition target Take-Two - with VP of corporate communications Jeff Brown issuing the stark warning: "We're not desperate and there's a clock ticking."

Speaking exclusively to GamesIndustry.biz at EA's Vancouver headquarters, Brown hit back at Take-Two chairman Strauss Zelnick's claim that the massive success of Grand Theft Auto IV vindicates the publisher's decision to put off consideration of the deal in expectation of a higher bid.

"It's always been mystifying as to why they thought it was important to wait," Brown said. "Everybody knew [GTA IV] was going to be fantastic; everybody knew it was going to sell like crazy. So to suggest anyone was surprised by the success of the game, commercial or critical, is nonsense."

Since the initial approach was made on February 24, EA management has been aggressive in its pursuit of Take-Two but has refused to increase the size of its original bid.

Brown rubbished suggestions that EA was undervaluing its target, whose GTA IV title has smashed sales records around the world, insisting: "The longer it takes to do [the deal], the less valuable it is to EA."

"EA's not desperate," he explained. "Part of our model for making this thing work at USD 2 billion is the assumption that if we can get this done in time to publish their games going into the Christmas holiday in '08 - because EA has an unchallenged publishing capability around the world - we could without question sell more units of those games than they could if they were on their own.

"The passage of time serves to weaken the value and the certainty of this deal."

Pressed on whether he still expected the acquisition to go through, Brown stated: "I think at best it's a 50/50 proposition." However, he dismissed comparisons that have been drawn with Microsoft's aborted pursuit of Yahoo!, arguing: "The big difference here was that a good search engine is a strategic priority for Microsoft. Take-Two is just not a strategic priority for EA."

"EA is now developing more games, more brand new IP than ever before in its 25 year history. We've got a three-year plan with explosive growth all the way to our fiscal 2011.

"We think [Take Two's studios are] really great teams, that they're creative people, and we would very much like to give them a home and access to our publishing capability, but we just don't need it."

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