In what could be viewed as bad news for Take-Two shareholders looking for a bigger offer from Electronic Arts or another company, it's been revealed today that two of the biggest owners of Take-Two stock have significantly reduced their stakes in the company.
U.S. mutual fund company Oppenheimer Funds, which is Take-Two's biggest shareholder, decided to cut its holdings in half, down to 8.8 million shares. Oppenheimer now holds an 11.5 percent stake compared to its previous 23 percent. The second company to cut its stake was FMR LLC, which is the parent company for the Fidelity mutual funds (second-largest owner of Take-Two shares). FMR reduced its stake from 14.7 percent to just 2.75 percent.
Wedbush Morgan Securities analyst Michael Pachter told Reuters that this news pretty much kills any hope of a bigger payout for Take-Two in an acquisition. "To the extent there was speculation that shareholders would band together and hold out for more money from EA, that's kind of shot down now," he said. "They are voting on this deal and they are voting with their feet. They know they have no leverage."
In related news, Take-Two also said that it's facing a shareholder lawsuit. The complaint filed in a Delaware court apparently "accuses Take-Two management of 'breaches of fiduciary duty' for refusing to explore EA's offer, arranging a large payout for executives if the company is acquired, and other matters, according to court documents," Reuters reported.
Although Take-Two management continues to believe that EA's deal undervalues the company's worth, Take-Two recently set up a new severance plan for its employees in the event of a buyout of the company, which could result in layoffs.
