EA Goes Hostile on Take-Two

After getting jilted by Take-Two (TTWO), EA (ERTS) has now gone hostile by extending a tender offer to Take-Two shareholders for $26 a share, the same price as the original unsolicited bid. The offer will expire April 11, a day after the Take-Two shareholder meeting.

Take-Two's line is that the offer is both too low and "comes at absolutely the wrong time", because the stock is bound to shoot up at the end of April, when the newest Grand Theft Auto game goes on sale. But TTWO has already been talking up the game's prospects -- earlier this week, it raised guidance based on strong pre-sale orders for the game -- and shares still haven't climbed back above the $26 ERTS offered last month.

Meanwhile Oppenheimer and Fidelity, Take-Two's two largest shareholders, have sold off much of their stakes in the company. What's next? A game of chicken: The WSJ cites analysts who predict ERTS will eventually walk away from the offer, in the hopes that shares will drop even lower -- and then come back to the table. That sounds plausible to us.