EA: Synergies will benefit Take-Two

In a conference call to investors today, Electronic Arts CEO John Riccitiello and CFO Warren Jensen once again underlined their determination to see through a deal that would result in the acquisition of Take-Two and its constituent parts.

Although the Take-Two board rejected the USD 26 per share offer on Friday, worth around USD 2 billion in total, Riccitiello and Jensen were bullish about the benefits such a deal would bring.

"When we think about synergies, the first thing we believe we can do is really take advantage of our publishing strength globally, how we can advance these great IPs over mobile platforms, online and in our packaged goods business," said Jensen.

"The second thing we do is take a look at what we think we can do on the cost side operationallyâ¦We can keep our fixed costs fixed, and only add variable expense on both the publishing and corporate sides."

And Riccitiello noted that while Take-Two's profitability tended to rest on the release of Grand Theft Auto titles, that is something that could change should the deal go ahead: "We believe we can take games from Take-Two and sell more of them."

"If you take a company like Take-Two in their off years - and you well know that they haven't made money in their off-GTA years - and imagine that revenue was higher and costs were lower because of the synergies on both ends, that they would be profitable in those years," he said.

"Which is precisely why we say we have questions about their future as a standalone company, and view this as an attractive transaction for Electronic Arts inside of our infrastructure."

When asked about if the Take-Two board had revealed an offer point that they would accept, Riccitiello revealed that they had not.

"To be truthful they did not give us an indication of a price that they were interested in closing this transaction, and to be frank we were very surprised that they would reject the USD 26 offer," he said.

"We view it as pre-emptive, it represents an enormous premium, and frankly a premium that I don't think they'll see at any time in the near future or in years to come, so it's a great deal for their shareholders - they did not give us an answer, but we're hopeful that they will shortly."

The offer to the Take-Two board will remain open for the time being, but could be withdrawn at any time, he added.