Video game publisher Electronic Arts Inc. said Friday it is extending its $2 billion hostile tender offer for rival Take-Two Interactive Software Inc. by a week but made the offer conditional on the termination of a poison pill adopted by Take-Two's board earlier this week.

EA said it is extending its tender offer to April 18 after the rival game maker pushed back the date of its annual meeting.

Take-Two delayed its annual meeting until April 17 and also adopted a "poison pill" shareholder rights plan to make the takeover more expensive for EA. At the time, Take-Two urged shareholders to reject the $2 billion buyout bid, saying the offer is just not high enough.

"The actions of the Take-Two board may increase the risk for their stockholders by delaying a potential transaction," said Owen Mahoney, EA's senior vice president of corporate development, in a press release. "We continue to believe that our $26 per share offer price is full and fair, and that a transaction between Take-Two and EA is the most compelling combination financially, strategically and operationally for all parties."

EA began its $26 per share all-cash tender offer on March 13. The deal represents a 64% premium to Take-Two's closing stock price on Feb. 15, the last trading day before EA sent its revised proposal to the company.
The tender offer is now set to expire at 11:59 p.m. EDT on April 18. As of 5 p.m. Thursday, about 5,000 shares of Take-Two had been tendered to Electronic Arts.

Some analysts have expressed surprise at Take-Two's refusal to enter into deal talks with Redwood City, Calif.-based EA, and others warn that resisting negotiations may result in EA walking away.

New York-based Take-Two provided a litany of reasons why EA's $26 offer is not in its best interests, specifically that the bid "substantially undervalues" the company's position in the gaming market and is "opportunistically timed to capture the value of the upcoming 'Grand Theft Auto IV' launch at the expense of our stockholders."
However, Take-Two said in its earlier statement that it has received "indications of interest" from other parties, while adding that it has not yet held any serious deal talks.

Strauss Zelnick, Take-Two's chairman, said the poison pill would "ensure that the Take-Two board has adequate time to consider all strategic alternatives for maximizing value for Take-Two stockholders. The agreement will not, and is not intended to, prevent a takeover of the company on terms that are fair to and in the best interests of all stockholders." - Donna Block