No Reason for EA to Raise Take-Two Offer

As reported on Monday, March 10, Oppenheimer Funds and Fidelity significantly reduced their respective interests in Take-Two Interactive (TTWO) as a direct result of concerns related to the company's stance on the Electronic Arts (ERTS) offer. This actions comes on the heels of various shareholder lawsuits against TTWO's Board with respect to the unsolicited offer, and it has been followed over the last two days by increasing shareholder dissent.

TTWO's attempt to paint a rosy picture during its Q1 (fiscal) conference is not a all surprising, but will do very little, if anything, to convince ERTS to increase its current offer, which is already above where it probably should be. TTWO's continued defiance to even considering the ERTS transaction will likewise have no positive affect on shareholders, who can be expected to continue to question the Board's tactics.

Thus, the previous assessments of this situation remain fully intact. ERTS has no reason to raise its offer price and recent events suggest that it could dictate terms by withdrawing the offer completely with the result being a major decline in TTWO's share price. Presumably, ERTS will make this point abundantly clear to TTWO over the next few weeks with the intention of at least bringing TTWO into negotiations.

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