New Investors Barred from Take-Two Meeting, EA Resistance Continues

New stockholders were barred from participating in Take-Two Interactive's annual meeting of shareholders, which ended just minutes ago. The move was likely intended to nullify the impact of arbitrageurs - those investors who capitalize on short-term stock fluctuations rather than long-term investment - who are said to now own a majority of Take-Two stock in the wake of Electronic Arts' acquisition offer to shareholders. Only those who owned Take-Two stock as of February 19, nearly a week before EA's offer was announced, were eligible to vote on matters such as the installation of a new board of directors, and the appointment of Ernst & Young as Take-Two's accountant firm. Take-Two chairman Strauss Zelnick helmed today's meeting, and restated his company's strong belief that Electronic Arts' offer comes "at the expense of you, the stockholders," and represents "a hostile process, not a cooperative one." According to Zelnick, whose company Zelnick Media currently manages Take-Two, EA significantly undervalues Take-Two's stable of developers and intellectual properties, going beyond the company's behemoth property Grand Theft Auto. Earlier this week, EA CEO John Riccitiello pointed to GTA developer Rockstar as his company's primary target in the acquisition bid, downplaying Take-Two's other studios. "A Much Better-Managed Company" In making his case for why Take-Two shareholders would not benefit from EA's takeover proposal, Zelnick pointed to what he sees as the company's numerous management successes since Zelnick Media was put in charge. "Take-Two is uniquely positioned to create stockholder value in an industry that is enjoying more growth than any in the entertainment business," he said. He called Take-Two "a much better-managed company," having completed its $25 million cost-reduction program and consolidated its label operations on the West Coast, "saving money and optimizing shared resources." Zelnick noted that, despite Grand Theft Auto being the biggest franchise for Take-Two, "and, indeed, for the entire industry," it is far from the company's only strength. He noted Take-Two has launched at least two new million-selling franchises annually since 2005, and holds the highest average review scores for any third-party publisher. Other cited advances include Take-Two's recently-announced Asian operations, the sale of its non-core accessories business, a more robust internal product review process, and "significant progress on outstanding litigation." The chairman pointed to analyst reports projecting new yearly benefits of $50-200 million from the company's "new synergies," which would correspond to a premium of $6-29 on share prices. Take-Two is still open to all strategic offers, including "remaining independent" as well as entertaining offers from other parties - of which it has already received many.