Status Report: Take-Two Interactive - Electronic Arts

Take-Two Interactive (TTWO) has disclosed the following regarding the previously announced FTC subpoena and civil investigative demand:

On June 18, 2008, the Company reached an agreement with the Federal Trade Commission [FTC] which will continue to allow the FTC access to the information it seeks in connection with its review of EA'’s Offer. The agreement will allow the Company to appropriately limit the scope of its production of information and witnesses, and alleviate the need for a hearing in the U.S. District Court for the District of Columbia on June 24, 2008.

Again, this situation offered TTWO two options to further frustrate Electronic Arts' (ERTS) efforts. TTWO could have resisted the FTC actions as an indirect means of disrupting the offer, although this would naturally have had negative consequences with the regulator. Instead, TTWO has evidently decided to cooperate with the FTC, which should allow the company to selectively provide information against the potential combination if it so chooses.

In essence, TTWO can now directly influence the timing and outcome of the FTC review, to some extent. By reaching this agreement with the FTC so rapidly, ERTS will essentially be forced to increase its offer sooner rather than later if it has any hopes of drawing TTWO into serious negotiations. If ERTS continues to maintain its current, insufficient offer, TTWO can simply provide the FTC with ample evidence to ensure a very difficult HSR process should ERTS attempt to continue its pursuit.

ERTS is therefore anticipated to increase its offer closer to the $30 level within the next few weeks.

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