On Wednesday, Take-Two Interactive Software announced it was buying back the chunk of shares in the company owned by Carl Icahn at a price of US$16.93 per share, i.e. the closing price the previous day.
Take-Two is a publisher of interactive games, including notably the wildly successful Grand Theft Auto.
Carl Icahn has held a position in Take-Two for a number of years and has had seats on the board since 2010. He last increased his holding about a year ago, when he bought an additional 1% of the stock to hold about 12.7% of the company at that time.
Even so he has not been the largest holder, with Black Rock Investments passively owning about 15%. Strauss Zelnick, the company’s Chairman and CEO currently holds about 6.2% of the stock. His partner in Zelnick Media, Karl Slatoff who is also COO of Take-Two owns about 5.9%.
As part of the deal just announced, the three Carl Icahn nominees on Take-Two’s Board of Directors he had been permitted to hold associated with his shareholding are submitting their resignations and leaving the board.
Accordingly, his son Brett Icahn, Jim Nelson and Sung Hwan Cho have now resigned from the Board of Take-Two.
The total purchase price Take-Two paid to buy back Icahn’s 12 million shares will be approximately US$203 million and will be funded from the company’s own cash and other liquid resources.
Following completion of the purchase, Take-Two will have about 81 million shares left outstanding, and with the shares settling back a little after the deal was announced, to US$16.27 per share, the market capitalization as of the time of writing is over US$1.3 billion.
The company’s Chairman and CEO Strauss Zelnick was quick to put a positive spin on the re-purchase, and to counter any thought that Icahn had simply grown weary of seeing either further major advances in the shares or, alternatively, a takeover announcement from anyone else, …
“This share repurchase reflects our confidence in the company’s outlook for record results in fiscal 2014 and continued Non-GAAP profitability every year for the foreseeable future, ”
“With our ample cash and strong expected cash flow, we are able to pursue a variety of investment opportunities, including repurchasing our Company’s stock.”
He was also gracious in thanking his three departing Directors saying as well, … “ They leave Take-Two better positioned than ever for continued success.”
While the latest Grand Theft Auto was a smash hit when it launched in September, the company’s shares are always impacted by its perception as a “big hits” type of business. And so shareholders are always a little worried about the next one even as the latest one does very well. Carl Icahn obviously isn’t an ardent gamer with long term belief in the business, though after a four year holding period this still seems almost an eternity compared to some of his usual deal time-frames.
About Take-Two Interactive Software
Headquartered in New York City, Take-Two Interactive Software is a leading developer, marketer and publisher of interactive entertainment for consumers around the globe. The Company develops and publishes products through its two wholly owned labels Rockstar Games and 2K. Its range of products is designed for console systems, handheld gaming systems and personal computers, including smartphones and tablets, for delivery through physical retail, digital download, online platforms or cloud streaming services.
About Strauss Zelnick
Strauss Zelnick is Managing Partner of ZelnickMedia, which he co-founded in 2001. He is responsible for managing the day-to-day operations of the firm as well as originating, structuring and monitoring its investments, with specific interest in music, film, television and interactive entertainment. Zelnick also serves as Chairman and CEO of Take-Two Interactive Software.
Prior to forming ZelnickMedia, Zelnick held leadership roles in a number of important media companies; including as CEO of BMG Entertainment a music and entertainment company; as CEO of Crystal Dynamics a producer of interactive entertainment software and as President and COO of 20th Century Fox with responsibility for all its world wide motion picture production and distribution.
He is a Trustee Emeritus of Wesleyan University and holds a B.A. from Wesleyan University, an M.B.A. from Harvard Business School, and holds a Doctorate of Jurisprudence from Harvard Law School.
He married Wendy Belzberg, daughter of Sam Belzberg of Vancouver, in January 1990.
ZelnickMedia is an international media partnership with revenues of around US$3 billion annually.
It manages and owns interests in an array of media enterprises, including interactive entertainment, television, wireless network software, business information, trade shows, and media-related business services in the U.S., Europe, Asia, and Australia.
Current portfolio companies include Take-Two Interactive Software, Airvana, Cannella Response Television, ITN Networks, Arkadium, Naylor, Alloy, and Tekelec. The partnership is currently investing from ZM Capital, its media-focused private equity fund.
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