elnino334 on 26 March 2008
http://www.next-gen.biz/index.php?option=com_content&task=view&id=9714&Itemid=59
By Kris Graft
New York-based Grand Theft Auto publisher Take-Two Wednesday morning advised shareholders to reject EA's $26 per share hostile bid, calling the offer "inadequate in multiple respects."The publisher cited financial advisors Bear Stearns and Lehman Brothers, who agreed with Take-Two's board, saying the offer was too low.
Wedbush Morgan's Michael Pachter, who had previously called EA's offer "more than adequate," disagrees.
"In our view, Take-Two's Board has made a mistake," he said in an investor note Wednesday. "We believe that the company was positioned to extract a higher offer from EA by offering a friendly transaction, and its Board chose to continue its adversarial posture."
He noted how EA's offer represented a 50 percent premium over Take-Two's pre-offer closing price.
Take-Two also said this morning that it would be exploring business combinations with other third parties, including EA. Pachter said that he thinks Take-Two "has virtually no chance of finding a better offer."
He added, "...We think that the strategy adopted by Take-Two's Board was ill-advised. Had they offered an olive branch, we think that EA may have increased its offer by $1 or more. Instead, the Board chose to reject EA's offer."
Pachter said he expects EA to withdraw its offer if it does not gain majority control through a tender, with Take-Two shares dropping around 20 percent.
Pachter has a "hold" rating on Take-Two shares.
Stern Agee analyst Arvind Bhatia said that he expects EA's offer to go through despite Take-Two's rejection.
"Our view is predicated on the fact that no other bidder for [Take-Two] has emerged and that major activist shareholders of [Take-Two] have been substantially reducing their ownership position in the stock since EA’s offer," he said.
Bhatia currently has a "buy" rating for Take-Two.
Take-Two shares were down 2 cents Wednesday morning to $25.80.
