Can you believe the drama going on between Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO) has dragged on for this long? I can't. According to this article, EA has let its current bid expire and intends on checking out additional stats behind the company in an effort to think more about what Take-Two has to offer and what its true value might be. The company behind the Grand Theft Auto series of mature-rated games is offering to give EA a presentation that includes non-public data.
EA really wants this deal. So does Take-Two. EA believes that it needs a super-franchise that goes beyond its sports dominance, and it feels that Grand Theft Auto would be one heck of an asset to own. It's true. EA would probably benefit from the title, and it might get the company's stock out of its current doldrums. And in a world where Activision Blizzard (NASDAQ: ATVI) is benefiting greatly from an acquisition and a merger -- Guitar Hero and Vivendi Games, respectively -- one cannot blame EA, I suppose, for keeping the dream alive.
EA is in something of a bad spot because, at this point, it probably will have to raise the bid on Take-Two. I think the market will ultimately be disappointed if EA doesn't get Grand Theft Auto (and BioShock, for that matter). It will be perceived as a failure on management's part, and shareholders will wonder where the growth will be coming from, and what catalysts can be counted on to drive the stock price higher in this tough economic environment.
Could EA survive without this merger? Sure. But investors on both sides want this deal to go through, and I think the ego of EA's management will be bruised if some kind of a transactions doesn't get consummated. I suppose their ego is already bruised considering that the tender offer's timeframe has come and gone. EA is simply going to have to consider paying up to complete this integration.
On the stock side of things, I wouldn't buy shares of either company. EA probably will, in my opinion, raise its offer at some point. It's a gamble, though. Besides, I've already made money on Take-Two. I sold long ago when the buyout was announced. There's no reason for me to revisit this past trade. I own Activision Blizzard in my portfolio, and that's good enough for me.
Disclosure: I own Activision Blizzard; positions can change at any time.
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