The terms of the acquisition were modified from those previously announced on September 3, 2003 principally to reflect the termination of TDK's videogame publishing rights for future versions of DreamWorks LLC's motion picture Shrek. However, the consideration payable to the shareholders of TDK, other than TDK USA Corp. ("TDK USA"), TDK's majority stockholder, has not been reduced.
Take-Two has purchased TDK for approximately $12.8 million, consisting of $0.55 per share for each of the 23,005,885 shares outstanding (approximately $12.6 million) and approximately $0.2 million to retire outstanding stock options. In addition, as a condition to the purchase agreement, Take-Two has satisfied approximately $9.7 million of outstanding liabilities (which as of the closing date constituted all of the liabilities of TDK to TDK USA) consisting of working capital advances and debt between TDK and TDK USA, by paying $4.3 million in cash and issuing $5.4 million in restricted shares of Take-Two common stock (or approximately 165,000 shares) to TDK USA. The working capital advances were principally for product development milestone payments, marketing expenses and advances to licensors incurred since July 18, 2003. These amounts are effectively reduced by approximately $8 million owed to TDK by Take-Two principally for products distributed by Take-Two under the terms of the distribution agreement with TDK.
Commenting on the acquisition, Jeff Lapin, Chief Executive Officer, said, "The addition of TDK's well established mass market and children's licensed properties will complement our portfolio of proprietary brands, and will provide an excellent platform for Take-Two to further expand and diversify its product offerings. In addition, we believe our proven product development and marketing capabilities will enhance TDK's product offerings and our distribution resources will offer additional outlets for TDK's products."
Effective immediately, certain trademark license agreements covering the TDK and Mediactive trademarks have been terminated, except for limited sell-through rights respecting existing products. Also, effective immediately, TDK Mediactive is changing its corporate name to Take-Two Licensing, Inc.
TDK was represented in this transaction by Europlay Capital Advisors, a Los Angeles, California based private advisory firm specializing in media and entertainment companies. Averil Capital Markets Group, a Los Angeles, California based private investment banking firm specializing in small- and mid-cap publicly-traded companies, was a co-advisor to TDK.