[Posted on May 7, 2008 - 5:17 PM]
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DiggMichael Pachter, an analyst with Wedbush Morgan Securities Inc., says that Electronic Arts Inc. [ERTS] and Take-Two Interactive Software Inc. [TTW0] remain far apart in hammering out a deal.
Pachter speculates that Take-Two, which EA has offered to buy for $2 billion, is asking for $2.6 billion, or about $34 a share, roughly double the target's closing stock price of $17.36 on Feb. 22, just before EA announced the offer. EA is likely prepared to sweeten its tender offer of $25.74 by more than two dollars per share, he says.
"The acid test now is does [EA chief executive John] Riccitiello's ego allow him to walk away if they can't agree or does deal lust drive him to make a deal at a higher price?" Pachter asks
Neither EA nor Take-Two would say whether the two sides are in active discussions on an acquisition. Take-Two in March rejected a $26 a share offer from EA and said it would not negotiate with any prospective buyer until after release of its "Grand Theft Auto IV" video game on April 29. Take-Two said the crime-themed video game sold 6 million units globally in its first week with an estimated retail value of more than $500 million..
EA vice president of communications Jeff Brown acknowledges that "significant differences" between the company and Take-Two continue to obstruct a deal. "Take-Two has never been a strategic imperative for EA--we have an incredible lineup of games planned for 2008 and a very solid three-year growth plan," he says. "We don't need Take-Two in order to hit our growth projections. So it's more of a want-to-have than a must-have." -- David Shabelman
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