Much virtual ink has been spilled over Electronic Art’s protracted campaign to acquire GTA IV publisher Take-Two Interactive. In the latest news – as GamePolitics reported yesterday – EA has extended its deadline until June 16th.
Variety’s Ben Fritz, who pens The Cut Scene blog, yesterday compared EA’s takeover bid to the seemingly doomed presidential campaign of Sen. Hillary Clinton:
EA staying in this race is a bit like Hillary Clinton staying in it — only a complete implosion by the opposition could result in a victory.
Although GP is on record as opposing the EA-T2 merger on the grounds that game consumers will inevitably be screwed in the deal, we couldn’t disagree more with Fritz’s conclusion that EA’s campaign is fruitless.
The deal will almost certainly get done, just not at EA’s current $25.74 offering price. We note comments made to GamePolitics by Wedbush-Morgan analyst Michael Pachter earlier this month when EA secured a one billion line of credit:
[EA] need[s] to raise around $800 million to complete the [Take-Two] deal [at $25.74]. The extra $200 million is just a cushion, although I suppose it could be construed as how much higher they’re willing to go [for Take-Two]…
So, EA needs about 30-33 million shares to acquire a majority stake in T2 and has an extra $200 million to spend on any price increase. That’s a potential $5-6 bump, depending upon the exact number of shares. When all is said and done, look for EA to own T2 for $27-28.