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Investing.com -- Shares of Take-Two Interactive Software (ETR:SOWGn), Inc. (NASDAQ:TTWO) fell 3.3% today as the company announced a proposed underwritten public offering of $1 billion of its common stock. The decline reflects investor response to the potential dilution of existing shares due to the sizable offering.
Take-Two, known for its popular video game franchises, stated that all shares in the proposed offering would be sold by the company. Additionally, it expects to grant the underwriters a 30-day option to purchase up to an additional $150 million of shares. The company aims to use the net proceeds from the offering for general corporate purposes, which may include repaying outstanding debt and financing future acquisitions.
The announcement comes at a time when many companies are exploring various financing options to strengthen their balance sheets and fund growth initiatives. Take-Two’s decision to potentially expand its share count could provide it with the necessary capital to pursue strategic goals but comes at the cost of current shareholders’ potential equity value.
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