Take-Two board re-elected

Support in face of EA takeover bid

SAN FRANCISCO -- Shareholders of Take-Two Interactive Software re-elected the board of the video-game publisher on Thursday, signaling support of directors' efforts to fend off a $2 billion takeover bid by rival Electronic Arts.

Shareholders also approved an executive incentive package that will give Take-Two management higher fees and additional shares, some of which will vest immediately in the event of a buyout.

Each director received at least 77% of votes cast while the incentive plan passed with 73% approval, a company spokesman said.

"It's definitely a vote of confidence that they believe in the current management," Janco Partners analyst Mike Hickey said of the measures passing.

The shareholder meeting was unusual because some analysts estimated that up to 70% of Take-Two's stock changed hands after EA went public with its offer on Feb. 24, too late to meet the Feb. 19 cutoff date to participate in the meeting.

"This can hardly be considered a show of shareholder confidence. (Take-Two Chairman Strauss) Zelnick's current shareholders were not allowed to vote on his pay package," EA spokesman Jeff Brown said.

After Take-Two, which publishes the blockbuster "Grand Theft Auto" franchise, rebuffed Electronic Arts' original overture, EA took its $26-per-share offer directly to shareholders in the form of a tender offer that expires at midnight on Friday.

But its offer was structured so if the compensation measure passed, the per-share value would fall to $25.74 due to the dilutive effect of the new shares.

Analyst Hickey said it was unlikely that EA had the 50% of shares tendered to enable it to take control of Take-Two, leaving the company to raise its offer or walk away, which it has threatened to do.

"It's not going to be a large enough number to provide leverage against the Take-Two board," Hickey said.

Zelnick reiterated his opposition to EA's offer at the shareholder meeting, saying the price undervalued the company's games lineup as well and recent cost-cutting measures.

"Since the board believes we are worth more than $26 a share, I urge all of our stockholders not to tender their shares at this price or at this time," Zelnick said.