EA extends Take-Two bid; 8 pct of shares accepted

By Scott Hillis

SAN FRANCISCO (Reuters) - Electronic Arts Inc (ERTS.O: Quote, Profile, Research) extended its offer for Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research) on Friday after winning over just 8 percent of shareholders ahead of the launch of Take-Two's "Grand Theft Auto 4."

Electronic Arts said its extension of the $2 billion offer to May 16 was due to a request from the U.S. Federal Trade Commission for more information about the proposed buyout, although Take-Two said the 8 percent support underscored shareholder displeasure with the bid.

Take-Two has rejected EA's offer as too low, saying it undervalues "Grand Theft Auto 4," a violent game widely expected to be the best-selling title of the year.

By extending the offer, which expired on Friday, without raising it, EA may be signaling its belief that even blockbuster sales of the new game after its April 29 release won't drive the stock higher.

"They are playing hardball," Kaufman Bros analyst Todd Mitchell said of EA, adding that the $25.74-per-share bid could rise by a dollar or two at most. "They will not do a deal that is not accretive to fiscal 2010. They cannot overbid for this. EA has a very strong revenue story but a weak earnings story."

EA shares rose 55 cents, or 1.1 percent, to close at $52.01, while Take-Two shares added 13 cents to $25.98, compared with the Nasdaq's .IXIC 2.6 percent rise.

"The minuscule number of shares tendered, as well as the strong vote in favor of the proposals presented at our annual meeting, offer indisputable evidence that our stockholders regard our efforts to enhance Take-Two's stockholder value as superior to the EA offer," Take-Two Chairman Strauss Zelnick said in a statement.

Arbitrage traders collectively hold a vast amount of stock, and some said they were waiting for a higher bid, focusing on "Grand Theft Auto."