Take-Two's Further Financial Woes

Next Generation reports that already beleaguered publisher Take-Two is now facing a lawsuit from a stockholder. The person bringing the suit claims the company has engaged in misleading tactics, insider trading, and inaccurate reporting. GameDailyBiz is also reporting that Elevated Partners are considering a buyout. These latest revelations may put the kibosh on that plan, though. From that article: "So will Elevation go for it anyway? Stranger things have happened, and the GTA franchise would certainly be a very valuable property. Furthermore, as the Post points out, Elevation doesn't seem to be afraid of investing in troubled companies. Just recently, the firm spent $100 million for part of Homestore.com even though several former Homestore executives were indicted for multimillion dollar fraud."

Jack?

[HunterZ]

Jack Thompson, is that you?

Re:Jack?

[ObsessiveMathsFreak]

Jack Thompson, is that you?

Everything he touches turns to dust! Dusssssstt....

Don't the "woes" make buyout more likely?

[Babbster]

I would think so since shareholders would be more willing to get rid of their shares for fear that the stock will take a tumble. Not to mention the fact that new ownership can take the "we didn't do it, we're cleaning it up" tack when dealing with the SEC and other government agencies.

Besides, with Bono on board, maybe we can finally get the oft-requested "GTA: Mogadishu"!

Grand Theft Auto 4

[imsoclever]

On a positive note, Take Two is going to use this as inspiration for the next iteration of the Grand Theft Auto franchise. In GTA4, gamers will assume the role of a thug from the streets who will take part in such illicit activities as insider trading and innacurate reporting.

Re:Grand Theft Auto 4

[damsa]

I would play this if I can play as Martha Stewart. Some insider trading, running a sweat shop making Kmart stuff and I would also have a back door hot coffee mod where in the mini game, you make hot coffee.

Lawsuit? Whoop-de-do

[hambonewilkins]

No offense to the poster, but shareholders sue companies all the time. Nothing ever really happens with these suits and they are certainly not noteworthy. So, that part of the story isn't "news." It's more "traditional business."

Contrary to poster

[Karem Lore]

This is a great time to buy...The buying company agrees to pay off the lawsuits (explaining that new management would be part of the deal) for Take Two (who may not have the cash) and take over Take Two at a reduced price for bailing Take Two out. Thereby closing the lawsuits and Take Two board keeping their jobs (for the time being) or being paid off. The buying company therefore makes a clean break, keeps the GTA name alive and rakes in profit from Bethesda's Oblivion and continuation of GTA (and other

Troubled Companies

[nick_davison]

Elevation doesn't seem to be afraid of investing in troubled companies.

So long as you've done a thorough due dilligence and are confident you've uncovered all of the problems, the main thing further fraud announcements do is confirm what you already knew, scare stockholders in to selling cheap, and let you get the same company for even less money.

Pulling numbers from my rear end:

Say GTA is worth $100m. The company as a whole is worth $200m.

Say news about fraud devalues the company down to $120m - really $140m but it swings lower before it normalizes.

If you can buy it out for $120m, spin off GTA in to something you own, then sell the remainder back for $40m, you've just bought the $100m company you wanted anyway and got it for $20m less.

Even if you can't offload the remainder for over $30m, that's still a $10m savings.

Absolute worst case, you get a second company that's currently worth $20m but more like $40m in real assets (just less, right now, due to its reputation hit) and you can break off the remaining pieces and sell them out piecemeal too.

So, in short, a company nose diving in value doesn't necessarily make it any less appealing to buy.

Re:Troubled Companies

[nick_davison]

Algebra is "made up numbers" too.

E=MC^2 is far more important as a statement about the relationship between the components than saying Total Energy = [some number for some specific item] x 89875517873681764m/s.

Similarly, for all the made up numbers, the point illustrates a relationship. I could have written:

A company is worth X where X = (Value of key franchise)Y + (Value of other franchises) Z. Now, due to stock market fluctuation, X may vary to be either temporarily greater or smaller than Y+Z, over-react