EA for GTA – It’s Gone Hostile

Big news this week in the electronic and video games sector is the Electronic Arts Inc. bid for Take-Two Interactive Software Inc., owner of the GTA (Grand Theft Auto) franchise – a bid that has now gone hostile.

EA took its $26-per-share offer directly to Take-Two shareholders and the tender offer expires on April 11, only two weeks or so before the latest “Grand Theft Auto” hits store shelves. GTA is one the game world’s killer series, it has sold over 65 million copies and is considered one of the most successful video games in history. It’s also New York based Take-Two’s main source of revenue and expected to bring in as much as $1.4 billion this fiscal year.

EA’s chief executive, John Riccitiello, said timing is crucial for the deal. “We are counting on being able to achieve revenue synergies by the holidays,” he said in an interview. EA wants to use its marketing prowess to sell more of Take-Two’s games in the winter shopping season, when video game companies make the most of their money.

Take-Two’s two largest shareholders, Oppenheimer Funds and FMR LLC, have substantially reduced their stakes in the company recently, a sign they may not expect the bid to go higher, and have taken their money and run. A few analysts have said the offer could increase, but there appears to be a limit at $27 (note that the $26-per-share bid was nearly 50 percent above Take-Two’s stock price before EA’s bid became public in February).

Take-Two has said the offer doesn’t value the company’s creative talents (including GTA’s creator Rockstar Games) and its management’s turnaround efforts after Chairman Strauss Zelnick and CEO Ben Feder took over in early 2007 following a shareholder coup prompted by financial and legal troubles.

But whether said talents make it worth more than $2 billion is moot. Not from City Chap’s perspective it ain’t.

EA’s offer for Take-Two follows Vivendi SA’s plan to buy Activision Inc., its biggest rival. That deal is expected to close in the first half of this year, creating a publishing powerhouse that incorporates the “World of Warcraft,” series, the world’s biggest multiplayer online game.

Whizz Kid Wants Controlling Stake In Precious Media

Venture capitalist Ingenious Media Active Capital (IMAC) has invested a further £2 million in TV production company Whizz Kid Entertainment, a company it has a 50% stake in. This follows the initial investment of £2.25 million in June 2006, when the company was launched by CEO Malcolm Gerrie.

The money is earmarked for the acquisition of a controlling stake in Precious Media, a ‘content exploitation’ specialist which aims to increase profits for content rights holders through strategies such as distribution through multiple outlets and securing sponsorship. Precious is interesting because it was one of the first companies to properly tackle the new distribution paradigm for multimedia content – where digital download and viewing on demand from multiple platforms is (or soon will be) king. The company develops formats and programmes for a full range of digital platforms, from mobile and VOD to IPTV and Pay-per-View and distributes them to broadcasters

IMAC, invests primarily in unquoted media and entertainment companies. Its parent company, Ingenious Media, both advises and invests in the media sector through various subsidiaries. Whizz Kid produces programmes in genres including television, entertainment, factual entertainment, events and music. The company has produced events including the Orange British Academy Film Awards, the BAFTA TV Awards, and Elton John’s 60th birthday concert.