Take-Two in possible talks with Electronic Arts

May 19, 2008: 12:15 PM ET

By Yi-Wyn Yen

Perhaps the third time is the charm for Electronic Arts. After its offer expired Friday, the video game publisher extended for another month its $2 billion tender offer to Take-Two Interactive's shareholders.

Many industry watchers say that EA (ERTS) and Take-Two (TTWO) are working on a friendly deal behind the scenes. Take-Two, the publisher of Grand Theft Auto IV, admitted Monday that it is in "formal discussions" with interested buyers. Analysts expect that EA is likely among the suitors.

"Of course they're talking. They have to be talking because it's the right thing to do," said Wedbush Morgan analyst Michael Pachter before EA's tender offer expired last Friday.

EA says it extended its offer to give the Federal Trade Commission more time to review the regulatory issues of the merger. EA's senior vice president of corporate development Owen Mahoney said in a statement that the company has a right to "terminate the offer," but so far it hasn't despite the multiple extensions and lukewarm support it's gotten from Take-Two's shareholders.

Many analysts have called for EA to raise its bid, but EA maintains its tender offer of $25.74 per share.  6.2 million Take-Two shares, roughly 8%, have been tendered as of last Friday. Take-Two's shares, however, have been trading slightly higher than EA's offer since GTA IV was released on April 29, which means selling on the open market would be more profitable for shareholders. Take-Two's shares opened at $26.79 on Monday after EA announced its month-long extension.

Take-Two rejected EA's bid because it thinks the Grand Theft Auto franchise and games like BioShock, a sci-fi shooter that Universal Pictures will make into a movie, are worth more. "EA's highly conditional offer fails to compensate our stockholders for our exceptional portfolio of intellectual property," said Take-Two CEO Ben Feder in a statement. "The small number of shares tendered into EA's offer to date demonstrates that our stockholders agree with what our Board has maintained from the beginning: EA's proposal undervalues our Company."

  • Take-Two vulnerable despite $500M blockbuster

    By Yi-Wyn Yen

    Take-Two Interactive's management is rallying behind the videogame company's impressive release of Grand Theft Auto IV last month, but its $500 million opening week may not have been good enough to impress shareholders or ward off a hostile takeover from EA.

    Take-Two's popular franchise, which was released on April 29, crushed Halo 3 in video game sales records and even surpassed movie ticket sales for Spider-Man 3, the blockbuster MORE

    - May 8, 2008 2:42 PM ET
  • Battle for Yahoo may turn hostile soon

    By Yi-Wyn Yen

    The deadline that Microsoft set three weeks ago for Yahoo (YHOO) to accept its buyout offer passed this weekend without either side making a move. While some analysts expect Microsoft to launch a hostile bid, it's possible that CEO Steve Ballmer will follow through on his threat and walk away from the deal.

    The three-month-old battle between Microsoft and Yahoo could come to a head fast. Yahoo has repeatedly MORE

    - Apr 28, 2008 8:38 AM ET
  • It's showtime for Microsoft-Yahoo

    Yahoo has until Saturday to accept Microsoft's offer. Courtesy of Yahoo.

    By Yi-Wyn Yen

    The Microsoft-Yahoo standoff could get ugly fast.

    Saturday is the deadline that Microsoft set three weeks ago for Yahoo (YHOO) to accept its buyout offer - or face the possibility of a hostile bid or a decision by Microsoft to abandon the deal altogether. The April 26 deadline brings to a head three months of high-profile jockeying during which MORE

    - Apr 25, 2008 2:00 PM ET
  • Microsoft CEO to Yahoo: Three weeks or proxy battle

    By Yi-Wyn Yen

    Steve Ballmer is losing patience. On Saturday, the Microsoft CEO issued an ultimatum to Yahoo's board of directors, writing a letter that said "now is the time" to negotiate on Microsoft's bid to buy the company. Ballmer set a three-week deadline for Yahoo's board to shake hands or else face a proxy fight in which Microsoft would try to oust Yahoo's directors and nominate its own committee.

    A Yahoo MORE

    - Apr 5, 2008 5:16 PM ET
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by VIP.