Summary
Take-Two Interactive Software, Inc. (TTWO) announced on December 21, 2009, a significant divestiture of its distribution subsidiaries, Jack of All Games, Inc. and Jack of All Games (Canada), Inc., to SYNNEX Corporation. This strategic move involves the sale of substantially all of the subsidiaries' assets for an aggregate purchase price of $43,250,000, structured as a combination of upfront cash, deferred payments, and a potential earn-out. This transaction is expected to impact TTWO's financial guidance for the first quarter and fiscal year 2010, as detailed in an accompanying press release and assumptions document. Investors should note that while the Company is guaranteeing the obligations of the selling subsidiaries, the sale is a key step in potentially streamlining operations or refocusing on core business areas. The agreement includes standard representations, warranties, and indemnification clauses, with a "tipping basket" threshold of $450,000 and a cap on indemnifiable losses at 30% of the purchase price.
Key Highlights
- 1Take-Two Interactive Software, Inc. is selling its distribution subsidiaries, Jack of All Games and Jack of All Games (Canada), to SYNNEX Corporation.
- 2The total purchase price for the assets is $43,250,000, comprising cash at closing, deferred payments, and a potential earn-out.
- 3The transaction is subject to customary closing conditions and includes a guarantee from Take-Two Interactive Software, Inc. for the obligations of the selling subsidiaries.
- 4The sale of these subsidiaries will affect Take-Two's financial guidance for the first quarter and fiscal year 2010.
- 5The agreement contains standard representations, warranties, and indemnification provisions, including a $450,000 "tipping basket" for losses.
- 6An ancillary distribution agreement is in place with SYNNEX for continued distribution services in the U.S. and Canada.