Mark Androvich
15:56 (BST)
11/03/2008
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Shareholder sues Take-Two over buyout rejection
Suit alleges failure to maximize shareholder value
Take-Two has been sued by a shareholder alleging that the company's management improperly tried to keep the Electronic Arts buyout offer secret to enrich its executives.
As previously reported, Take-Two's Board made executive appointments on February 15 - also approving a measure that increased the compensation that management would receive in a merger or takeover.
This move came only a few days after the company received a buy-out offer from EA which it rejected in a letter dated February 15.
According to the New York Times, a lawsuit was filed last Friday in Delaware Chancery Court on behalf of Take-Two shareholder Patrick Solomon alleging that the moves - including the "outright rejection of EA's offers and failure to negotiate" - represent a failure to "reasonably respond" and "maximize shareholder value."
The suit names Strauss Zelnick and Benjamin Feder, the partners of ZelnickMedia who took control of Take-Two in 2007.
The suit spotlights the board's decision on February 15 to increase ZelnickMedia's management fees and bonuses to USD 16.5 million, from USD 3.8 million, in the event the company was sold.
Take-Two recently arranged a severance plan for employees who lose their jobs because of a takeover by another firm.
In a statement, the company said: "We believe that the claims lack merit, and intend to defend vigorously against them."
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