Take-Two takeover complete

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Dissident shareholders late Thursday won control of Take-Two Interactive Software, ousting CEO Paul Eibeler and installing Strauss Zelnick as chairman at the video game company behind the controversial "Grand Theft Auto" franchise.

The board and top executives at Take-Two had been under siege from a group controlling 46% of company shares, including OppenheimerFunds, D.E. Shaw Valence Portfolios, SAC Capital Management and Tudor Investment Corp.

Zelnick, a former chief executive at BMG Entertainment, said he and a new board aim to make the company more efficient and that job cuts are not in the immediate future.

"In three to six months we're going to outline a plan," he told reporters during a news conference. "We need to create more hits. I sense a lot of the creative talent is in place."

Take-Two's directors are now Zelnick, Michael Dornemann, Benjamin Feder, incumbent John Levy, Jon Moses, Michael Sheresky and appointee Grover Brown, also an incumbent.

Feder will serve as acting CEO of the New York-based company.

Take-Two is best known for "Grand Theft Auto," which is not only a best-selling video game franchise but also infamous for raising the ire of parental advocate groups and Congress. For example, "Grand Theft Auto: San Andreas" players who cracked a special code were treated to scenes of CGI characters engaging in certain sex acts.

Congress at the time asked the Federal Trade Commission to look into the matter, and such major store chains as Wal-Mart and Best Buy pulled the product from shelves. Still, it was the best-selling video game of 2004.

Take-Two's troubles also include the behavior of its former chairman and CEO Ryan Brant, who pleaded guilty to first-degree falsification of business records in one of the earlier, high-profile cases related to Wall Street's stock-option backdating scandals. The company eventually had to record $42 million in additional expenses from 1997-April 2005.

All this had taken a toll on the stock, which sunk from about $30 in mid-2005 to less than $10 a year later. It has since been on the rise, and it was goosed for 25% in the past three weeks as the shareholders began agitating for change.

Shares closed up 1.2% on Thursday at $21.10 and rose more than 6% in after-hours trading in anticipation of the shareholders vote.

Take-Two has said it would consider a sale of the company or other alternatives, though none was presented at the shareholders meeting Thursday.

Reuters contributed to this report.
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