Take-Two Stock Takes Steep Dive After EA's Withdrawal
Many gamers applaud Take-Two "fending off" EA's buyout attempts, and although EA has pulled out, it's not all roses. After EA decided to abandon its pursuit of the Grand Theft Auto IV publisher, Take-Two stocks took a nasty tumble.
According to Reuters, their stock fell nearly 30% on Monday, obviously due to the recent EA-related events. EA's former bid of $25.74/share (about $2 billion) suddenly looks extraordinarily generous, as Take-Two shares were trading at only $15.45 when the Nasdaq opened today. And perhaps this is the reason why EA decided to cut off takeover talks, as hinted at by EA Senior Vice President for Corporate Development, Owen Mahoney: "We were very convinced the value of the transaction would decline over time and have come to feel more and more strongly about our own business." At the same time, Take-Two Chairman Strauss Zelnick isn't too worried, as he says the publisher is "still in talks with other parties on strategic alternatives," mentioning his company was "on a strong growth track." One UBS analyst, Benjamin Schachter, said in a research note that Take-Two may be seeking another buyer, and Ubisoft apparently has potential in that area.
There's always more going on behind the scenes that we're never aware of, as evidenced by this development. Did EA know Take-Two's shares would fall? Or did they fall entirely as a result of EA's withdrawal? And will Take-Two eventually sell to someone? Well, all in due time, fellow industry followers, all in due time...
9/15/2008 Ben Dutka