Video game publisher Electronic Arts Inc. has for a third time extended the deadline for its $2 billion tender offer to buy smaller rival Take-Two Interactive Software Inc., but it did not raise the price as many analysts had expected.
Take-Two again spurned the offer price as too low while saying it has "begun the process" of formally talking to interested parties. EA is the only company that has publicly expressed interest in buying Take-Two and analysts aren't expecting another suitor to come forward.
Redwood City, Calif.-based EA said Monday it is extending the offer, which had expired Friday, to June 16 at 11:59 p.m. EDT. The price remains $25.74 per share although Take-Two's stock has not traded below $26 since May 1. Analysts, such as Wedbush Morgan's Michael Pachter, expect EA to end up paying about a couple of dollars more per share to get the deal done.
As of Friday, about 6.2 million shares had been tendered, representing about 8 percent of Take-Two's outstanding shares. This is slightly below the roughly 6.4 million shares that had been tendered as of April 17, the day before EA last extended the deadline.
EA said the latest extension allows the Federal Trade Commission's antitrust review of the proposed acquisition to continue.
New York-based Take-Two is best known for its "Grand Theft Auto" series of games. The latest installment of the popular franchise sold 6 million copies worldwide in its first week on sale, bringing in more than $500 million and making it the most lucrative video game launch in history.
Take-Two said the "GTA IV" launch, as well as a recently announced movie deal for its critically acclaimed "BioShock" game, shows the company is worth more money than what EA is offering. EA, meanwhile, says its offer already takes the success of "GTA IV" into account.
Earlier this month, EA, whose games include the "Madden NFL" football franchise and "The Sims," gave an outlook below Wall Street's expectations for the current fiscal year, suggesting it could use Take-Two's titles to boost its performance.
Take-Two urged shareholders to reject the offer.
"The small number of shares tendered into EA's offer to date demonstrates that our stockholders agree with what our board has maintained from the beginning: EA's proposal undervalues our company," said Chief Executive Ben Feder in a statement.
In another sign it is serious about going through with the offer, EA earlier this month disclosed it has secured debt financing commitments of up to $1 billion for the proposed acquisition.
Take-Two's shares fell 19 cents to $26.91 and EA's shares dropped $1.17 to $48.43.
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