By launching a $26 per share, $1.9 billion tender offer for Take-Two Interactive Software Inc., video game maker Electronic Arts Inc. is gambling that it has enough support from its unwilling target's shareholders to avoid raising its offer price and circumvent negotiating a friendly deal.

"We've always felt that the $26 was ­really a full and fair price and a great deal for their shareholders and employees," Owen Mahoney, Electronic Arts' senior vice president of corporate development, said in an interview Thursday. "We think the longer this goes on, the less valuable the asset is."

EA has not had any direct discussions with Take-Two since it unveiled its orignial bid three weeks ago, other than to notify the company this week of the tender offer, Mahoney added.

He said the tender offer was "the next logical step" in an acquisition after Take-Two reiterated earlier this week it was not interested in talking about a deal until after its "Grand Theft Auto IV" game comes out April 29. Take-Two chairman Strauss Zelnick made the comment during a conference call Tuesday to discuss the company's first-quarter earnings, which beat Wall Street expectations. The company also raised its guidance for 2008. Zelnick argued that Take-Two's strong prospects bolster its case for rejecting EA.

Responding to EA's tender offer, Take-Two on Thursday urged its shareholders to take no action and said it would review and respond to it within 10 business days. A Take-Two spokeswoman said the company would make no further comment until it files its response.

If market reaction to the latest move is any indication, EA's tender offer stands a good chance of succeeding. Shares of Take-Two were trading at $25.63 late in Thursday's session, a nearly 3% increase for the day but still below EA's per share offer, suggesting investors don't expect a higher offer to emerge.

"If the market believed it would be unsuccessful or EA would sweeten the deal, you'd expect it to be trading above the offer price," said Janco Partners Inc. analyst Jeff Hickey.

A turning point may have been reached earlier this week when two of Take-Two's largest shareholders, OppenheimerFunds Inc. and Fidelity Management & Research LLC, disclosed they had sold off portions of their stakes since EA's original offer was disclosed on Feb. 24.

"The fact that two shareholders significantly reduced their position gives the perception that investors are willing to take $26--they're voting with their feet," Hickey said. "It suggests they didn't think it's worth a significant amount more."

While recognizing that the shareholder base has changed since EA's offer was disclosed and that Take-Two's shares have traded above $26 since the offer was made, Mahoney argued the current offer price continues to reflect an accurate valuation of the target.

"We believe that $26 is full and fair, we feel very strongly about that," he said. "So it's more about what we feel than what anybody else feels."

Morgan Stanley is the dealer-manager for the tender offer and Georgeson Inc. is information agent for EA. Bear, Stearns & Co. and Lehman Brothers Inc. are Take-Two's financial advisers and Proskauer Rose LLP its legal adviser. -- David Shabelman