Electronic Arts launches hostile offer for Take-Two

By Scott Hillis and Anupreeta Das

SAN FRANCISCO (Reuters) - Electronic Arts Inc (ERTS.O: Quote, Profile, Research) on Thursday launched a hostile offer for rival video game maker Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research) at $26 a share, taking the $2 billion bid directly to stockholders.

Take-Two, publisher of the popular "Grand Theft Auto" -- or "GTA" -- series, last month rejected EA's unsolicited all-cash offer at the same price. The bid represents a 64 percent premium over Take-Two's closing stock price on February 15, the last trading day before EA sent the proposal to the company.

"We believe that the offer we made is compelling. It is a full price and the longer we go on, the less valuable the asset is to us. At least so far, Take-Two's board is indicating they don't want to negotiate," EA Chief Executive John Riccitiello told Reuters in an interview.

Take-Two responded with a statement advising shareholders to take no action for now on EA's offer. Take-Two executives have argued that EA is trying to buy the company on the cheap just before the April 29 launch of "GTA 4," widely expected to be one of the best-selling games of 2008.

"While today's news means EA is moving forward with its offer, an acquisition by EA is by no means a certainty," Chairman Strauss Zelnick and Chief Executive Ben Feder wrote in a company-wide e-mail that was also filed with regulators.

Take-Two added that its board would review the offer and tell shareholders of its position within 10 business days.

This week, Take-Two, which also makes games like "Bioshock" and "Major League Baseball 2K," forecast quarterly earnings above Wall Street estimates, saying advance orders for "GTA 4" were better than expected.

Analysts said Take-Two shareholders might warm to EA's bid, and that a number of recent buyers may be risk arbitrageurs.