Take-Two Proxy Battle on Tap

With its annual shareholder meeting just about a week away, video-game publisher Take-Two(TTWO) is likely to see a regime change.

Take-Two is facing a revolt by a large bloc of shareholders comprising OppenheimerFunds, D.E. Shaw Valence Portfolios, S.A.C. Capital Management and Tudor Investment. Together the group is gunning for a change in the CEO and the board of directors.

And the shareholders are likely to succeed in their efforts, say corporate governance experts.

"This is very different from the usual situation where a shareholder has about a 10% stake or less and has to solicit for additional votes," says Beth Young, senior research associate with The Corporate Library. "In this case they are almost already there."

With control of nearly 46% of outstanding shares, there is unlikely to be a long, drawn-out or expensive proxy fight, and current management at New York-based Take-Two is most likely to be swept out -- unless it strikes a deal with the dissenting shareholders, say experts.

"It is extraordinary that a group with that much stock is asking for change, and it is a pretty big deal," says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "All they need to do is pick up a few additional votes to get what they want."

Elson suggests that the shareholder filing may also be a ploy to put pressure on the board to replace management. "If at some time the management does not respond, they will look to change it," he says. "And if shareholders are that angry, there clearly will be changes."