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With the challenges facing independent video game publishers, virtually every smallish company toiling in the sector these days is the subject of takeover speculation. Struggling Take-Two Interactive Software Inc. [TTWO] has been no exception, and talk that the maker of the popular and violent "Grand Theft Auto" series might be absorbed by a bigger company only got louder after a group of activist investors ousted its management in March.

Forget it, says new chairman Strauss Zelnick, according to Reuters. He argues that the company structure has slimmed significantly since he took over and that Take-Two is now in "growth mode." He made similar comments right after shareholders approved the activist slate, so the news really isn't news. But what else could he say?

Acknowledging the reality of the game publishing world would only amount to hanging out a "for sale" sign. Surviving the periods between title releases is tough for independent shops like Take-Two, which earlier this month agreed to a $140 million loan to cover capital expenditures. Consolidation is a fact of life in the industry, with bigger publishers on the hunt for smaller rivals.

Shares of Take-Two, which closed at $20.14 the day after the management ouster on March 29, were trading at $14.80 midday Tuesday, a 27% decline. Figuring in an estimated 20% premium on its shares, the company might have fetched a rather steep $1.8 billion from a buyer eight months ago. Under the same premium assumption, the company would go for roughly $1.3 billion now, making it significantly more attractive to potential acquirers like Electronic Arts Inc. [ERTS] or Microsoft Corp. [MSFT]. Any takers? - Olaf de Senerpont Domis

See Nov. 26 story from Reuters
See Sept. 27 post from Tech Confidentail
See March 30 story from TheDeal.com

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