THE MAKERS of the top-selling Grand Theft Autovideo games, Take-Two Interactive Software, posted a record gain in Nasdaq trading yesterday after Electronic Arts made a $2 billion takeover offer for the company.
Take-Two rose above Electronic Arts's $26-a-share offer, a sign investors anticipate a higher bid.
Take-Two rejected the cash offer last Friday, leading Electronic Arts to go directly to shareholders.
Electronic Arts, the maker of Need for Speedracing and Maddenfootball games, is seeking to take advantage of overlapping sports titles and the fourth instalment of Grand Theft Auto.
Take-Two chairman Strauss Zelnick said yesterday that the offer undervalues the New York-based company and he is willing to talk to Electronic Arts after releasing the next Grand Theft Autoat the end of April.
"This acquisition shows that money is really no object for Electronic Arts when it sees an asset it wants," said Evan Wilson, an analyst with Pacific Crest Securities in Portland, Oregon.
"At $2 billion there is significant uncertainty whether Electronic Arts will be able to glean a return on investment that's beneficial to its shareholders."
Take-Two jumped $9.29, or 54 per cent, to $26.65, the biggest gain ever for the company, which went public in 1997. The stock was down 5.9 per cent this year before yesterday. Electronic Arts fell $2.25, or 4.5 per cent, to $47.49.
"There can be no certainty that in the future EA, or any other buyer, would pay the same high premium we are offering today," Electronic Arts chief executive John Riccitiello said in a February 19th letter to Take-Two's Zelnick that was made public yesterday.
A purchase would allow Electronic Arts to maintain its standing as the world's largest video-game maker, a spot it will lose when Vivendi SA combines its games unit with Activision.
Together, Take-Two and Electronic Arts had about $4 billion in sales last year, compared with a $3.8 billion pro forma estimate for Activision and Vivendi's games business. Vivendi said in December it will contribute its $8.1 billion video-game business and pay $1.7 billion in cash for a 52 per cent stake in the combined company.
- (Bloomberg)
