Did anyone notice that Take-Two (NASDAQ: TTWO) closed today at $25.14, or sixty cents under EA’s current (and apparently endlessly renewable) $25.74 tender offer?
By our count it’s at least the second time that TTWO has closed below the tender price in the past week, admittedly a rocky one for Wall Street. It seems kind of strange, since EA will buy all the TTWO you care to sell them at 25.74. Why would anyone sell below that price?
For interpretation, GamePolitics turns to Wedbush-Morgan super-analyst Michael Pachter:
GP: Mike, what do you make of TTWO closing well below the EA tender price of 25.74? That would seem to be a natural floor…
Pachter: The daily [share] price is the probability-weighted price of a [T2-EA] deal happening. [The expectation of] no deal is [priced] around $17-20, a deal at $28 has a relatively high probability. Before, the arbs placed a higher chance of a deal, and a higher [share] price.
GP: So are you saying that today’s close $.60 under the [EA] tender price reflects a sense that the deal is now less likely?
Pachter: A combination of less likely or a lower expected deal price. Probably more of the latter, as a tribute to EA’s discipline. Still very likely that a deal happens at $27-28.