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Published April 29, 2008 at 2:15 PM
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With the economy tightening, the fight for America's entertainment dollar has escalated to an all-out war. Companies such as Blockbuster Inc.[BBI], Electronic Arts Inc. [EA] and Microsoft Corp. [MSFT] are looking for deals that obviously would add to their bottom lines or potentially would expand their respective businesses into new sectors that they originally did not compete in. Let's take a look at how those stocks are doing Tuesday amidst current developments that have cropped in their current M&A pursuits and the backdrop of the overall markets. The Dow backpedaled 41.52, or .34%, to 12,828.11, while, the Nasdaq slipped 10.52, or .43%, to 2,413.88 in Tuesday early-afternoon trading.
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- Take-Two Interactive Software Inc. [TTWO] is up 6 cents, or .23%, to $26.53. as gamers are celebrating the debut of the highly anticipated "Grand Theft Auto IV." Expectations for the release are high as analysts predict sales to positively impact the bottom line of Take-Two, which the company can use as a bargaining chip to negotiate a better deal from unsolicited bidder Electronic Arts. Currently, the two companies are in a stalemate as New York-based Take-Two says the $26 per share offer from EA undervalues it. The deals in now set to expire May 16.
- Meanwhile, Blockbuster is down 6 cents, or 2.01%, to $2.92 as the company reportedly is in talks to purchase a stake to a new channel that will be formed by Viacom Inc.'s Paramount Pictures Corp., Metro-Goldwyn-Mayer Inc. and Lions Gate Entertainment Corp., and is intended to be a competitor to HBO, Showtime and Starz, according to The Wall Street Journal. The potential deal raises the question of what Blockbuster would bring to the new venture besides money. Unlike the other partners, Blockbuster owns no content and is primarily just a distributor of content through its DVD rental service. Additionally, the potential venture comes on the heels of Blockbuster's most recent attempt to acquire struggling retailer Circuit City Stores Inc.
- Lastly, Microsoft Corp. dropped 40 cents, or 1.41%, to $28.58 as investors wait and see what the tech giant's next move is in its bid for search engine Yahoo! Inc. Microsoft has been rejected twice by Yahoo! claiming the $31 per share offer undervalues the company. Some fear that if Microsoft pulls its bid, Yahoo!'s shares will drop from its current $26 range back to the high teens before the offer. Additionally, the potential decline could set off shareholder lawsuits.
- Gerald Magpily
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