No Take-Two for You, Electronic Arts

Electronic Arts (Nasdaq: ERTS  ) is making a point. Unfortunately for EA, the point is moot.

The leading video game maker sent a pointed message to Take-Two Interactive (Nasdaq: TTWO  ) this morning, reducing its $26-per-share unsolicited bid to exactly $25.74 a share.

The move is a shot at Take-Two's top brass, who rushed a controversial stock compensation plan that rewards the CEO's affiliated Zelnick Media company with freshly minted shares. EA insists that its offer is still worth $2 billion. It's simply penalizing Take-Two for the dilution. 

EA is going more for style points than substance here. The original tender offer was set to expire today, and shareholders aren't nibbling. Just 6.4 million shares have been tendered to EA, only about 8% of Take-Two's shares outstanding. The new tender is being extended for a few more weeks, but what's the point?

Do you really think that the other 92% that passed on the $26 exit strategy will walk the plank for even less? Of course not. Grand Theft Auto IV comes out later this month. Sequels for last year's surprising hits -- BioShock and Carnival Games -- are on the way. The Zelnick Media flap is unfortunate, but shareholders are over it. They approved the company's stock incentive program during this week's annual shareholder meeting.

EA isn't getting Take-Two. It's just slamming an ex-lover's Facebook page. Maybe it needs to do this for the sake of closure, but it's not going to win back the girl it never really had.

This could be problematic for EA, because Take-Two never closed the door on a buyout. It simply stated that EA's unsolicited offers -- at $25, $26, and $25.74 -- undervalued the company. That's only natural, because EA's offers value Take-Two at an earnings multiple in the teens, based on its guidance, which it has increased. That's a sharp discount to the multiples that other developers like Activision (Nasdaq: ATVI  ) , THQ (Nasdaq: THQI  ) , and EA itself are fetching.  

Take-Two also wants to wait until after the release of Grand Theft Auto IV, a game so huge that Microsoft (Nasdaq: MSFT  ) is forking over $50 million for a pair of episodic installments delivered through Xbox Live.   

In other words, EA simply will have courted trouble if these actions invite video game rivals with hot hands like Activision and Viacom (NYSE: VIA  ) into a bidding war for Take-Two next month.

So are you satisfied, EA? Think you're cool? Why don't you lower that offer from $25.74 to $25.72, if only to hammer home the point that you're taking back your two cents' worth? Then you can go from $25.72 to $25.62, just to tell the world that you don't give a dime. You're styling now, my friend. Either way, you'll be taking your Facebook profile pic at arm's length, because you're all alone.

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