Take-Two, EA: No Talks Till After 'Grand Theft' Release

Gamers aren't the only ones anxiously awaiting release of "Grand Theft Auto IV" April 29. It's becoming increasingly clear that Electronic Arts Inc. (ERTS) is going to have to wait until after the release date to enter into negotiations with the game's publisher Take-Two Interactive Software Inc. (TTWO). In rejecting EA's $26 a share, $2 billion offer back in February, Take-Two said it would not negotiate until after the game's release, and it has stuck to that stance ever since.

It's not quite clear why Take-Two adopted this position. The obvious explanation is that it felt EA was being opportunistic by attempting to make the acquisition before release of the game, which is expected to be a blockbuster. But even if the two sides did come to some kind of agreement from the time the first offer was made, it was unlikely to close a deal before the release date, principally because of regulatory issues that arose when the Federal Trade Commission on April 17 made a second request for information from EA.

We're certainly not in a position to tell Take-Two when or how it should negotiate. It pays good money for exactly that kind of advice. And in the end, adopting a hard stance could be the right move if it ends with EA or someone else offering a higher bid than the current $25.74 per share offer. But not agreeing to negotiate with EA until after "GTA IV"'s release has only served to make what could have been a more friendly negotiation much more hostile, potentially making EA a little more stubborn when it comes to the table. And it's not like Take-Two is going to take all of the money it makes from "GTA IV" and spend it -- we imagine most of it will still be in an interest-bearing account somewhere.

Even after the release of "GTA IV," there's still time for EA to close a deal before its own summer deadline so it can take control of Take-Two ahead of the busy holiday shopping season. But by taking its offer directly to shareholders, EA has started the regulatory wheels in motion, which will speed up the process if an agreement can be reached or in the unlikely event Take-Two shareholders take the current offer.

For now, the waiting game continues for "GTA IV" fans and Electronic Arts. The gamers will have their appetites whetted in less than a week (Best Buy is even opening stores at midnight for die-hards), but EA will have to be a little more patient. - David Shabelman

See April 18 story on Take-Two rejecting EA's offer from Tech Confidential
See April 22 post on EA's renewed offer from BaldGuyBlog.com

Comments

[Mark Berger]

Buddy - Have you read the reviews that are coming out GTA IV? "Best Video Game of All Time" "Perfect 10/10" "The Story is Oscar Quality"
This is going to be the best selling video game of all time in terms of revenue - that's why Take-Two waited - EA is going to have to pony up huge at this point - or Take Two stays independent and starts to really roll....

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