EA's Bid for Take-Two Goes Hostile

Electronic Arts, which is locked in a takeover battle with video game publisher Take Two Interactive, launched a tender offer directly to Take Two's shareholders for $26 a share, the same price it offered the company in February. Take Two has rebuffed the offer.

Meanwhile, a shareholder lawsuit has landed on the doorstep of Take-Two, just weeks after the company’s board approved changes to a pay-agreement with an investment firm that runs the company, according to the New York Times.

Filed in Delaware Chancery Court last week by Prickett, Jones & Elliot – on behalf of Take-Two shareholder Patrick Solomon – the lawsuit alleges that moves by Take-Two’s board to boost ZelnickMedia's pay in the event of an acquisition reflect a failure to “reasonably respond” to two offers made by Electronic Arts to buy the company, and “minimize shareholder value,” according to the Times.

Between EA’s two offers, both of which were rejected, Take-Two’s board approved a change to an agreement that more than tripled ZelnickMedia’s cash pay for providing cash management consulting services to the company, hiking from $750,000 – the annual fee it pays the firm – to $2.5 million in the event the company were sold.

Named in the suit are Strauss Zelnick, founder of ZelnickMedia and Take-Two chairman, and Benjamin Feder, Take-Two CEO and a partner with Zelnick Media.