Take-Two to Buy Back Stake from Icahn - Analyst Blog
November 27 2013 - 1:00PM
Zacks
Video game maker Take-Two
Interactive (TTWO) made its intention clear to buy back
the 12.4% stake owned by Icahn Associates in the company for a
price of $16.93 per share.
We feel this is a win-win situation
for both the companies, as the buyback would help Take Two to
increase its ownership stake, whereas Icahn Associates would rake
in a profit of $85.0 million from the sale.
Icahn is known for buying
substantial stakes in companies and at the same time pushing them
to restructure their corporate strategy or management policies.
Moving on those lines, Icahn increased his stake in Take-Two to
12.9% from 11.7% in 2012. While the trading price was $12.00 at
that point of time, the stock reached a five-year high of $19.25 in
Aug, 2013.
After Icahn decided to sell his
stake in Take-Two, the directors designated by Icahn Associates
resigned from the board, conforming to the earlier decision. As
Icahn is well known for his activism, the recent stake buyback
would provide Take Two even greater autonomy and help it to make
decisions independently.
Lately, Take Two has gained
significant attention due to the popularity of its latest
releaseGrand Theft Auto V. In the recently concluded
fiscal 2014, revenues surged 340.3% year over year to $1.27
billion.
Take-Two management disclosed that
the company has 10 games lined up for launch but refrained from
providing details. The company seems to be optimistic about its
product line up, which is expected to generate increased cash.
Although the company has a decent
product portfolio, stiff competition from game developers such as
Electronic Arts (EA), Activision Blizzard
Inc. (ATVI) and social gaming companies such as
Zynga Inc.(ZNGA) remains a major headwind in the
near term. Moreover, a fragmented gaming industry may temper growth
prospects to a certain extent.
Take-Two has a Zacks Rank #3
(Hold).
ACTIVISION BLZD (ATVI): Free Stock Analysis Report
ELECTR ARTS INC (EA): Free Stock Analysis Report
TAKE-TWO INTER (TTWO): Free Stock Analysis Report
ZYNGA INC (ZNGA): Free Stock Analysis Report
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