What is Electronic Arts thinking? The video game giant says it wants to buy Take-Two Interactive, the company behind the Grand Theft Auto francise, but it doesn't seem like it's in any hurry. Since making its original offer in February, the EA (ERTS) has lowered its bid, then continually extended its offer, even though Take-Two (TTWO) management and shareholders have been holding out for more money.
Here's a theory that's been making the rounds recently: EA will be bailing out very soon. It's only sticking around for the time being, the argument goes, because it's waiting for Federal regulators to sign off on a theoretical acquisition. And that approval should be in the works, since Take-Two decided last week to cooperate with the FTC and avoid a court date.
What happens once EA gets Hart-Scott clearance? In theory:
- EA makes one last now-or-never offer to TTWO shareholders, perhaps for a bit more than its current $25.74.
- Then it walks away.
- Then TTWO shares plunge back into the teens, where they'd been prior to EA's original bid.
- Then EA comes back in a few months, or later next year, and makes a similarly sized offer, which desparate TTWO owners agree to right away...