Video game maker
) 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
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
Lately, Take Two has gained significant attention due to the
popularity of its latest release
Grand 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
Activision Blizzard Inc.
) and social gaming companies such as
) remains a major headwind in the near term. Moreover, a
fragmented gaming industry may temper growth prospects to a
Take-Two has a Zacks Rank #3 (Hold).
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