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EA and Take-Two: Far Away So Close

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Well, waddya know -- Electronic Arts (Nasdaq: ERTS  ) is dropping its hostile pursuit of Grand Theft Auto developer Take-Two Interactive (Nasdaq: TTWO  ) at long last. But the wooing continues on friendlier terms.

The courtship, which started behind the scenes last year but moved into the public spotlight way back in February, stalled out after five deadline extensions; EA lost hope of getting the combined company up to speed before the crucial holiday season.

Take-Two's share price took a 5% dip today, but still remains some 44% higher than it was before the whole two-step routine started. GTA4 proved its mettle and strengthened Take-Two's argument that EA was bidding way too low. Take-Two is still a midget in the video gaming market beside giants like Electronic Arts, Activision Blizzard (Nasdaq: ATVI  ) , and Microsoft (Nasdaq: MSFT  ) , but it's a dwarf with muscle and tenacity beyond its diminutive stature.

Let's be honest -- Electronic Arts is the only pure game developer wealthy enough to afford a $2 billion asking price. In these times of tight corporate financing practices, EA can simply hand over that much in crisp, unfolded bank notes. Shanda Interactive (Nasdaq: SNDA  ) is hardly in the market for violent action games, but is second-best in the sector with $464 million of net cash, and THQ (Nasdaq: THQI  ) runs a distant third with $282 million.

With that in mind, the flirting moves back behind the curtain again as EA now is an official part of Take-Two's "strategic review" and might end up getting the prize after all. The two companies are still talking -- presumably on fairly friendly terms -- and all the dainty bride really seems to want is a somewhat larger purse, stuffed to the brim with dollar bills.

Better luck next year, perhaps? My magic eight ball thinks so.

Further Foolishness:

Microsoft is a Motley Fool Inside Value pick. Take-Two Interactive Software and Shanda Interactive Entertainment are Motley Fool Rule Breakers selections. Electronic Arts and Activision Blizzard are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, and he prefers plastic guitars to blood-soaked taxis. You can check out Anders' holdings if you like, and Foolish disclosure is the one who survived.

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