Video game maker Electronic Arts ERTS on Monday urged the publisher of Grand Theft Auto to accept its unsolicited $2 billion takeover bid quickly, saying it's only a matter of time before it pulls its premium offer.
EA wants an agreement on a deal before the release of Grand Theft Auto IV. Take-Two Interactive Software TTWO says it's willing to talk, but only after the next installment of its popular crime game goes on sale in April.
EA's $26-per-share cash bid sent Take-Two's stock soaring more than 50% in Monday trading. The offer represents a 64% premium over Take-Two's closing stock price of $15.83 on Feb. 15, the last trading day before EA made its proposal. The offer wasn't announced until Sunday.
"There can be no certainty that in the future EA or any other buyer would pay the premium we are proposing today," EA CEO John Riccitiello said in a conference call with analysts Monday.
On Sunday, Take-Two said EA is being opportunistic and "attempting to take advantage" of the upcoming Grand Theft Auto IV launch. Take-Two Chairman Strauss Zelnick said that while the company is open to talks with EA, it wants to wait until April 30.
Grand Theft Auto has sold 65 million copies in various incarnations and is considered one of the most successful video games in history. EA publishes mainstays such as Madden NFL,The Sims and FIFA Soccer.
In its offer, EA is banking on the success of the GTA IV, and hopes to put its marketing muscle behind the eagerly awaited title. Acknowledging that EA is underrepresented in M, or Mature-rated titles, Riccitiello said the deal would give the company "the world's best M-rated content."
Take-Two would give EA a shot at keeping its post as the world's top video game publisher. French media and telecom giant Vivendi plans to combine EA's chief rival, Activision, with its own games unit to form Activision Blizzard. The combined company will own the wildly popular online game World of Warcraft and the Guitar Hero franchise.
But even if EA wins Take-Two, it isn't clear whether the brothers who helped create Grand Theft Auto will remain part of the company. Sam and Dan Houser, who lead Take-Two's Rockstar Games label, are under contract with the company only until next year.
Take-Two and Sam Houser did not immediately return phone calls seeking additional comment Monday. Riccitiello said he has "enormous respect" for Rockstar and its leadership, and called the team, which has survived six CEO transitions at Take-Two, "resilient."
EA did not say how much value it placed on Rockstar — and Grand Theft Auto— when it formulated the purchase price for Take-Two.
But regardless of whether they stay with the company doesn't make a "whole lot of difference to the deal," said Wedbush Morgan analyst Michael Pachter.
"If they choose to go independent, EA will be their first customer," he said.
EA's offer comes less than a year after a shareholder coup ousted Take-Two's top leadership over poor results, accounting troubles and controversy surrounding violent and sexual content in the company's games.
Several former Take-Two executives, including Chairman and CEO Ryan Brant, pleaded guilty in 2007 to falsifying business records in connection with a probe into backdated stock options.
Also last year, the British Board of Film Classification refused to certify Manhunt 2, a gory game which received an Adults-Only rating from the Entertainment Software Rating Board in the USA.
A Take-Two buyout would be by far the largest in EA's history. In January, the company closed its acquisitions of BioWare and Pandemic Studios, known for their action, adventure and role-playing games, in an $860 million deal.
Earlier this month, EA announced that Spore, the highly anticipated game from Sims creator Will Wright, will go on sale on the weekend of Sept. 7 amid likely stiffer competition in the $18 billion video game market.