Take-Two buys back Icahn stake, ending firm's role on board

Staff Writer
Columbus CEO

(c) 2013, Bloomberg News.

Take-Two Interactive Software, maker of the "Grand Theft Auto" games, bought back a $203.5 million stake from Carl Icahn, ending his involvement with the company after an 81 percent gain in the shares.

Take-Two is buying 12.02 million shares at yesterday's closing price of $16.93 a share, according to a statement. Under an almost four-year-old pact between Take-Two and Icahn Group, the investment firm had agreed that its directors would leave the board if Icahn sold the stake. That led the board members -- Brett Icahn, Jim Nelson, and SungHwan Cho -- to step down today.

Icahn, an activist investor, shook up Take-Two's board in January 2010 after acquiring about 11 percent of the video-game company. When Icahn built his stake, he was betting in part that Take-Two might get acquired, a person familiar with his thinking said at the time. While that never happened, the stock gain has made the investment profitable for the 77-year-old billionaire.

In the most recent quarter, "Grand Theft Auto V" helped boost earnings. Excluding some items, profit soared to $325.6 million, or $2.49 a share, from $10.2 million, or 11 cents, a year earlier, the company said in October.

"This share repurchase reflects our confidence in the company's outlook for record results in fiscal 2014," said Strauss Zelnick, chief executive officer of New York-based Take-Two, said.

When Icahn forged his agreement with the company on Jan. 21, 2010, the stock price was $9.37. Through Monday, the shares had climbed 54 percent in 2013. They fell 4.3 percent to $16.21 as of 10:16 a.m. in New York following Tuesday's announcement.

At the time of the 2010 board deal, Cho, Nelson and Brett Icahn — Carl's son — were put forth as directors. Carl Icahn has used a similar strategy at other companies to boost stock prices. Nuance Communications Inc., a maker of speech- recognition software, named two Icahn directors to its board in October.

LionTree Advisors and Willkie Farr & Gallagher LLP served as Take-Two's advisers on the transaction. The buyback was made outside the company's stock repurchase program, which authorized them to buy back 7.5 million shares.

"Grand Theft Auto V" came out on Sept. 17 and recorded the biggest three-day sales debut of any video game or feature film in history, Take-Two said. In the quarter, the company shipped about 29 million copies of the game, a fantasy of thug life in Southern California.

"The timing for 'GTA V' was excellent," Zelnick said in October. "We saw huge demand and really no other alternatives."