Take Two shares plunge after EA pulls bid

NEW YORK (Reuters) - Shares of U.S. video game publisher Take Two Interactive Software Inc (TTWO.O) plunged nearly 30 percent in premarket trading on Monday after larger rival Electronic Arts Inc (ERTS.O) abandoned its takeover bid.

EA said on Sunday it terminated private talks with the publisher of the "Grand Theft Auto" video game and decided not to pursue an acquisition.

They entered talks last month, when EA dropped its hostile bid of $25.74 per share, or about $2 billion, which Take Two had rejected as inadequate. Shares of Take Two fell to $15.45 in electronic trading before the Nasdaq open.

The decision by EA, which publishes hit titles like "Madden NFL," to withdraw came after Take Two executives outlined their three-year product plans and provided due diligence of the company's books as part of their private talks.

"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," EA Senior Vice President for Corporate Development Owen Mahoney said in an interview on Sunday.

Price was likely another sticking point, even as EA said it continued to have a "high regard" for Take Two's creative teams and products.

"EA has been consistent in their approach regarding value and our shareholders have repeatedly rejected the price they offered. There's very little else more that meets the eye," Take Two Chief Executive Strauss Zelnick in an interview.

Zelnick said Take Two was still in talks with other parties on strategic alternatives, adding that the company was on a strong growth track and that its value has risen significantly due to blockbuster sales of "Grand Theft Auto 4."

UBS analyst Benjamin Schachter wrote in a research note that Take Two might be able to find another buyer, suggesting that Ubisoft Entertainment SA (UBIP.PA) could be interested.