EA To Make Hostile Bid For Take-Two: Take The Money And Run

March 13, 2008 by Douglas A. McIntyre

Electronic Arts (NASDAQ: EA) is not going to wait any longer for Take-Two (NASDAQ: TTWO) to put off the larger company’s $26 a share offer. Take-Two claims it is looking for a better deal,

But, no better deal has come along. In TTWO’s latest quarter, the company lost money. Before the EA offer, Take-Two shares traded at $17. There will be no other bid from anyone else. Take-Two is a perfect fit for larger video game firm EA. The combination will allow for large cuts in staff, overhead and marketing costs.

To get what it wants, EA will begin a hostile bid for Take-Two’s shares. According to The Wall Street Journal "EA plans a tender offer to acquire all of Take-Two’s outstanding shares for $26 each."

Most companies which receive an offer at a huge premium from a larger company in their industry should simply not waste time fighting. The lessons of Dow Jones with the bid from News Corp (NYSE: NWS) and Microsoft’s (NASDAQ: MSFT) offer for Yahoo! (NASDAQ: YHOO) tell the same thing. The chance to save money by putting together two operations in the same basic business combined with a price offer way above market almost always leads to the same end. Wall St. quickly understands that it is the best deal in the world.

Douglas A. McIntyre