EA and Take-Two talking takeover
Electronic Arts wants to buy Take-Two primarily for the smaller company's massively successful Grand Theft Auto franchise.(Paul Sakuma/Associated Press)
Electronic Arts Inc. is not planning to extend its takeover offer for Take-Two Interactive Software Inc., maker of the hugely successful Grand Theft Auto video game series, but the two companies are talking about a deal.
New York-based Take-Two confirmed on Monday that it had signed a confidentiality agreement with EA, based in Redwood City, Calif., to begin discussions about "strategic alternatives." EA had said earlier it wouldn't extend the deadline past midnight Monday for its $2-billion US takeover offer — which values Take-Two at $25.74 US per share.
The two companies have been arguing about a takeover for months, with Take-Two holding out for more money. The company did not want to sell to EA before its late April release of Grand Theft Auto IV, which has since broken numerous sales records for video games.
EA, which has extended its offer five times, says it must now review its offer because any acquisition could not be completed before the holidays, when video game makers make most of their money.
Analysts believe the two companies will eventually join and are jockeying for position.
"They are both posturing," Michael Pachter, an analyst with Wedbush Morgan Securities, told the Associated Press. "EA is saying, 'we want to pay less,' Take-Two is saying they want more. The important thing is that they are talking."
Take-Two will make a financial presentation to EA that will detail its three-year product release schedule and financial projections, according to EA. Aside from the Grand Theft Auto series, Take-Two has a number of sports titles as well as the critically acclaimed BioShock game, which is being made into a movie.
Pachter said he believes the takeover price will be somewhere between $26 US and $27 US and could happen this week.
The Federal Trade Commission is also conducting an antitrust review of a potential EA takeover of Take-Two. The regulator is expected to complete its review by Thursday. EA said it does not believe a deal would be prevented by antitrust issues.
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