Analyst: EA, Take-Two To 'Continue To Posture'

While EA won't extend its $2 billion tender offer to acquire Take-Two when it expires at midnight tonight, Take-Two is expected to make a management presentation to EA within the next few days. The two companies could still reach an acquisition agreement (EA has said it's "hopeful"). However, Wedbush Morgan analyst Michael Pachter expects the two parties to "continue to posture" in the very near term, with Take-Two unlikely to yield its long-standing position that EA's offer is "inadequate." The $25.74 per share bid is in excess of Take-Two's current share price as of press time. For EA's part, predicts Pachter, the company may even discuss lowering its bid to motivate Take-Two's timely acceptance. "We expect EA to impress upon Take-Two management that its offer is subject to being lowered due to likely completion after the holidays," says the analyst. Investors have tendered about 15 percent of Take-Two's total to EA, but are unlikely to tender significantly further, Pachter says, because of several conditions still outstanding -- first and largest is that the Federal Trade Commission has yet to issue a conclusion on the proposed transaction. Its final decision is due August 21. Secondly, Take-Two's "poison pill" remains in effect, and the analyst doesn't expect that the company will immediately remove it. Pachter does anticipate a successful acquisition "later this year," however, at a $1 or $2 per share premium to EA's current offer, and he also expects a "conditional" greenlight from the FTC later this week.