By Don Jeffrey
March 19 (Bloomberg) -- Take-Two Interactive Software Inc., the money-losing maker of ``Grand Theft Auto'' video games, delayed its shareholder meeting and said it may sell itself after dissident investors announced plans to seize control of the company.
The shares jumped 8.4 percent after Take-Two said it is considering alternatives to present at the company's annual meeting. The gathering, scheduled for March 23 in New York, will now be held on March 29, Take-Two said today in a statement.
Shareholders with 46 percent of the company, including Steven Cohen's SAC Capital Advisors LLC, said on March 7 they plan to install their own directors and management. Take-Two has had five quarters of losses while failing to find hits to match the ``Grand Theft Auto'' series. Former Chief Executive Officer Ryan Brant pleaded guilty last month to charges stemming from a probe into improper options grants.
``The company's trying to see if it can come up with an alternative option for shareholders to consider besides the one proposed by the group,'' Edward Williams, an analyst with BMO Capital Markets, said in an interview.
Williams, who is based in New York, has a ``market perform'' rating on the shares and said he doesn't own them.
Shares of New York-based Take-Two rose $1.76 to $22.61 at 4 p.m. New York time in Nasdaq Stock Market composite trading, giving the company a market value of about $1.65 billion. The company's market value was $1.28 billion before the shareholder group's announcement.
Potential Buyers
A competitor such as Electronic Arts Inc., the world's largest video-game maker, may be a likely buyer, analysts including Williams and Mike Hickey, of Janco Partners in Greenwood Village, Colorado, said. Hickey has a ``buy'' rating on Take-Two and doesn't own the stock.
``We don't comment on our acquisition strategy,'' Jeff Brown, a spokesman for Redwood City, California-based Electronic Arts, said in an interview.
Private equity firms may not be as interested in acquiring Take-Two, Hickey said, because of the ``lumpiness'' in revenue and profit and the hit-driven nature of video-game making.
Take-Two restated eight years of results in February to account for $42.1 million in unreported compensation costs after it discovered options grants had been backdated. New CEO Paul Eibeler is now faced with controlling the rising cost of making video games for new consoles such as the Xbox 360 and the PlayStation3.
``They have absolutely brilliant product but the management team has proven its inability to execute over the past couple of years,'' Hickey said.
Ousting Eibeler
The dissident group plans to oust Eibeler and possibly Chief Financial Officer Karl Winters.
OppenheimerFunds Inc., the company's largest shareholder with a 25 percent stake, is in the group that also includes David Shaw's D.E. Shaw & Co. and Paul Tudor Jones's Tudor Investment Corp.
Two current Take-Two directors, John Levy and Grover Brown, will be among the seven the group would put on the new board. Among them also is Strauss Zelnick, a former head of BMG Entertainment, who would be named chairman.
The company said it is seeking ``additional time to review the proposed actions of the shareholder group and also to evaluate alternative courses of actions that could potentially be presented to the shareholders, including a possible sale.''
Jim Ankner, a spokesman for Take-Two, said the company had no comment beyond the release.
Jonathan Gasthalter, a spokesman for SAC Capital Advisors, declined to comment, as did Jeaneen Pisarra, a spokeswoman for OppenheimerFunds. Shawn Pattison, a spokesman for Tudor Investment Corp., and Trey Beck, a D.E. Shaw spokesman, did not immediately return calls seeking comment.
To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.
Last Updated: March 19, 2007 16:17 EDT
