Neither EA nor Take-Two would say whether the two sides are in active discussions on an acquisition. New York-based Take-Two in March rejected a $26 a share, or $2 billion, offer from EA and said it would not negotiate with any prospective buyer until after release of its "Grand Theft Auto IV" video game on April 29. Take-Two said the crime-themed video game sold 6 million units globally in its first week with an estimated retail value of more than $500 million.
Michael Pachter, an analyst with Wedbush Morgan Securities, said that although the two companies are likely talking, they remain far apart on Take-Two's valuation. Pachter speculates that Take-Two is asking for roughly $34 a share, or $2.6 billion, roughly double its closing price of $17.36 on Feb. 22, just before EA's offer was made public. EA is likely prepared to sweeten its tender offer of $25.74 by more than $2.00 per share, he said.
"The acid test now is does [EA CEO John] Riccitiello's ego allow him to walk away if they can't agree, or does deal lust drive him to make a deal at a higher price?" Pachter asked.
Take-Two shares closed Wednesday modestly lower at $26.26, suggesting investors expect EA to raise its bid. - David Shabelman
See the full story from The Daily Deal later Wednesday.
See Dealwatch: Take-Two
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