In that fashion, the extension is merely a formality, to allow the bid to remain outstanding until the investigation concludes. The new bid deadline is now August 18, so it's safe to assume we'll see at least one more extension at that time, since any move EA makes would need to be after the 21st.

It looks like EA has made a bit of small gain, though, as far as the likelihood of bringing the acquisition to fruition:

EA's $2 billion tender offer remains the same, at $25.74 per share. Take-Two's stock has seen a small decline in recent weeks, though, after spending several weeks trading at a somewhat higher valuation than EA's offer. Either due to the drop-off in GTA IV-related investment or due to an overall downturn in the economy, Take-Two currently trades at about $25 per share, apparently making EA's offer more attractive to investors.

Almost twice the number of Take-Two shares have been tendered to EA since the last bid extension — EA has now been sold 11,741,339 shares by Take-Two investors, as opposed to 6,139,824 about a month prior. This still represents only about 15% of the whole, far from the majority EA needs, but it's a sign that more investors may be ready for a sale.

Board chairman Strauss Zelnick reiterated his monthly recommendation that shareholders not tender their shares, while stating again that other, unspecified parties are interested in acquiring the company.

"We are fully engaged in a formal process to evaluate strategic alternatives that have the potential to deliver greater value than EA's inadequate offer," said Zelnick. "As part of this process, we continue to engage in meaningful discussions with multiple parties, a number of whom have been conducting due diligence. We also remain absolutely focused on executing on our strategic and business objectives."

The merger was first announced in December of 2007, but has just now been finalized. Through it, Blizzard and Sierra parent Vivendi becomes a wholly-owned subsidiary of Activision, scoring 295.3 new shares of Activision stock. It'll also buy 62.9 million new shares for a total of $1.7 billion - the result is that Vivendi owns a stake of about 52 percent in its new parent company.

Santa Monica-based Activision's new name will officially be Activision Blizzard, a moniker change also approved by the shareholders today, but it'll continue to trade on the NASDAQ under its same symbol, ATVI.

Full details after the jump.

Activision Stockholders Approve Combination with Vivendi Games

SANTA MONICA, Calif., Jul 08, 2008 (BUSINESS WIRE) — Activision, Inc. (Nasdaq: ATVI) today announced that, at a special meeting of stockholders held earlier today, it received the stockholder approval necessary to consummate the company's agreement with Vivendi, S.A. to combine Vivendi Games, Vivendi's interactive entertainment business, with Activision's businesses. All of the proposals required to effect the transaction received more than 92 percent of the shares voted. The transaction is expected to close on or around July 9, 2008.

Activision and Vivendi Games will combine their businesses through the merger of a newly formed, wholly-owned subsidiary of Activision with and into Vivendi Games. As a result of the merger, Vivendi Games, the parent company of Blizzard Entertainment and Sierra, will become a wholly-owned subsidiary of Activision. Vivendi will receive approximately 295.3 million newly issued shares of Activision common stock. Concurrently with the merger, Vivendi will purchase approximately 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share for a total of approximately $1.7 billion in cash, resulting in a total Vivendi ownership stake in Activision Blizzard of approximately 52% on a fully diluted basis and approximately 54% of shares outstanding. As of the closing of the transaction, Activision will be renamed Activision Blizzard and will continue to operate as a public company traded on NASDAQ under the ticker ATVI.

Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide pure-play online and console game publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry.

Activision Blizzard maintains operations in the U.S., Canada, the United Kingdom, France, Germany, Ireland, Italy, Sweden, Spain, Norway, Denmark, the Netherlands, Romania, Australia, Chile, India, Japan China, the region of Taiwan and South Korea. More information about Activision Blizzard and its products can be found on the company's website, www.activisionblizzard.com.

Cautionary Note Regarding Forward-looking Statements: Information in this press release that involves Activision Blizzard's expectations, plans, intentions or strategies regarding the future are forward-looking statements that are not facts and involve a number of risks and uncertainties. In this release, they are identified by references to dates after the date of this release and words such as "outlook", "will," "remains," "to be," "plans," "believes", "may", "expects," "intends," and similar expressions. Factors that could cause Activision Blizzard's actual future results to differ materially from those expressed in the forward-looking statements set forth in this release include, but are not limited to, sales of Activision Blizzard's titles in its fiscal year 2009, shifts in consumer spending trends, the seasonal and cyclical nature of the interactive game market, Activision Blizzard's ability to predict consumer preferences among competing hardware platforms (including next-generation hardware), declines in software pricing, product returns and price protection, product delays, retail acceptance of Activision Blizzard's products, adoption rate and availability of new hardware and related software, industry competition, rapid changes in technology and industry standards, protection of proprietary rights, maintenance of relationships with key personnel, customers, vendors and third-party developers, domestic and international economic, financial and political conditions, foreign exchange rates, integration of recent acquisitions and the identification of suitable future acquisition opportunities, , the Activision Blizzard's success in integrating the operations of Activision and Vivendi Games in a timely manner, or at all, and the combined company's ability to realize the anticipated benefits and synergies of the transaction to the extent, or in the timeframe, anticipated. Other such factors include the further implementation, acceptance and effectiveness of the remedial measures recommended or adopted by the special sub-committee of independent directors established in July 2006 to review historical stock option granting practices by Activision Blizzard and its board of directors, the finalization of the tentative settlement of the SEC's formal investigation and final court approval of the proposed settlement of the derivative litigation filed in July 2006 against certain current and former directors and officers of Activision Blizzard relating to Activision Blizzard's stock option granting practices, and the possibility that additional claims and proceedings will be commenced, including additional action by the SEC and/or other regulatory agencies, and other litigation unrelated to stock option granting practices and any additional risk factors identified in Activision Blizzard's most recent annual report on Form 10-K and quarterly reports on Form 10-Q and the definitive proxy statement filed on June 6, 2008 in connection with the proposed transaction with Vivendi. The forward-looking statements in this release are based upon information available to Activision Blizzard as of the date of this release, and Activision Blizzard assumes no obligation to update any such forward-looking statements. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of Activision Blizzard and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.

That is, unless the FTC finishes its investigation sooner. It's now got the information it needs from EA in its quest to determine possible antitrust issues, but Take-Two has appeared to struggle with fulfilling the broad-ranging request; when it was initially uncompliant, the District Court of Washington, D.C. had demanded it show cause, with Take-Two risking an injunction if it failed to pony up.

However, Tiffany Steckler of EA's corporate communications said that the August 21 timeline applies regardless of what Take-Two does:

"Whatever happens with Take-Two's process doesn't impact [the FTC's] timing, because our agreement with the FTC provides that they complete their review within the 45 days," she said.

Take-Two eventually reached a compromise with the FTC through which it'd be able to provide all the necessary information, but it has yet to fully certify compliance with the FTC, as EA has done as of market close yesterday.

EA's offer still remains at $25.74 per share, which for the past several weeks has been slightly below Take-Two's daily average share price — but now, things have changed:

Take-Two is currently trading at $23.99, which might make a sale to EA a big gain for shareholders in an economic downturn. Why has Take-Two's price been slumping?

Many analysts had theorized that, once the hype around Grand Theft Auto IV's launch began to ebb, Take-Two's share price would see a gradual adjustment back downward. Prior to EA's offer, the price per share had lingered at about $17 before the stock saw a spike largely on anticipation of the offer, and in some part on the strength of GTA IV. But it may be that post-launch for the major title, while at the same time EA's offer appears to hang in compliance limbo, investors are becoming impatient and selling off.

Most likely, though, the lower share price is due to the overall market downturn and concern about oil prices, and has nothing to do with EA's offer, says Wedbush Morgan analyst Michael Pachter. EA, as well as many other companies in the industry, are seeing somewhat lower values as well.

"It's nothing in particular concerning video game stocks," Pachter said. "Take-Two is worth the same, it won't impact EA's offer."

Said a Take-Two spokesperson, "Our position with respect to EA’s tender offer remains unchanged. Take-Two’s Board is committed to and focused on a process of considering all strategic alternatives to maximize the value of Take-Two. We are considering any and all alternatives which will deliver greater value to stockholders than the current EA offer."

The U.S. District Court of Washington D.C. had asked Take-Two to show why it wasn't complying with the FTC's broad-ranging information request as it investigates potential antitrust issues for the possible combination, probably regarding the companies' sports portfolios.

For its part, Take-Two had claimed that complying with the full scope of the FTC's requests would have been too expensive and labor-intensive, and asked for "reasonable limits."

It's now gotten those limits yesterday through an agreement with the FTC, and the investigation will now continue without the need for Take-Two to appear in court. EA had also previously reached an agreement with the FTC that would delay any acquisition attempt until the completion of the investigation - the fact that Take-Two won't have to appear in court should simplify the process quite a bit.

Said Take-Two in a statement, "The Company is pleased that a resolution has been reached that should substantially reduce the economic burden on the Company and focus the inquiry in a way that should minimize the distraction to the Company’s employees. The Company intends to continue to cooperate fully with the FTC."

EA's current offer deadlines July 16th, but any acquisition will have to wait until the FTC makes its final determination.

"For clarity’s sake, I think you’ve got a slight mis-remembering of what we said," Riccitiello told an audience member who asked about capitalizing on GTA IV's release value. "We were extremely explicit that there was no possibility whatsoever that we would be able to acquire the company or close the transaction prior to the release of GTA IV."

"What we said is we wanted to close the transaction in time to affect holiday sales for some of the games like Midnight Club, catalog for GTA and others. And so the reason we’re continuing to extend it, that was our plan all along and that was the way we described it at the time."

The questioner was probably prompted to the question by EA's recurring comments about the time sensitivity of their offer, but Riccitiello said that "the depreciating nature of the asset was not necessarily about GTA."

"It is that one more holiday period where we can sell more puts money onto the bottom line."

The publisher has not, however, raised its offer above $2 billion, or $25.74 per share, as the FTC's investigation process continues. Take-Two was recently asked to explain to the U.S. district court of Washington, D.C why it is refusing to fully comply with the commission's information request. Take-Two risks an injunction if it doesn't provide the full scope of info, which has been speculated to pertain to portions of its sports portfolio.

EA senior VP of corporate development Owen Mahoney congratulated Rockstar on Grand Theft Auto IV's successful launch, but maintained that despite the title's success, EA's offer "reflects a full and fair price based on the long-term value of Take-Two's entire operation."

When Kotaku spoke to Mahoney about the deal, he said that the longer the process goes on - both Take-Two's resistance and possible delays due to FTC investigations - the less valuable it is to EA. That was back in April, and it's now June.

Plus, EA's agreement with the FTC means the publisher will wait 45 days beyond the time that compliance by both parties is determined to be complete, which drags the process out even further. Is time still a factor?

"That's every bit as true today as when Owen said it a couple of months ago," said EA VP of corporate communications Jeff Brown. "Time erodes the value of this deal."

The FTC has asked to review a large volume of information across two separate requests; for EA's part, Brown says that it's taking them some time to put the information together. "It is our intention to [fully comply]," he said. "There's no dispute on our side."

Take-Two board chairman Strauss Zelnick recently made some bold comments at an investor event, claiming that its portfolio, particularly in the contentious sports arena, out-rates EA's in a head-to-head comparison, information that, if true, might suggest that EA needs a higher offer to seal the deal.

"It seems like Strauss has been playing football without a helmet; he needs to check his numbers," said Brown.

Kotaku has requested comment from Take-Two, and will update with any response we receive.

As of today, only an insignificant portion of Take-Two shares - 6,139,824, or 7.9 percent of the total - have been tendered to EA.

Said Zelnick, "The latest extension of EA's unsolicited, highly conditional tender offer does not alter the fact that their proposal still significantly undervalues Take-Two, a fact that is reflected in the overwhelming number of stockholders who still have not tendered their shares."

"Our Board of Directors remains in unanimous agreement that the proposal is contrary to the best interests of Take-Two stockholders, and the Board continues to recommend that stockholders not tender their shares to EA. The Board remains focused on the strategic process that began formally on April 30 to consider all alternatives to maximize value. We believe that these alternatives, which may include a business combination or remaining independent, will deliver greater value to stockholders than the current EA offer."

We know that, as we speak, the FTC is thoroughly investigating the possible takeover of Take-Two by Electronic Arts, to be sure that there are no antitrust issues. The FTC first made one request for information, and then a second one, indicating they're analyzing the deal very closely.

EA cut a deal with the FTC by which it consented to a 15-day extension on the investigation period, making it 45 days, and in return the publisher agreed it wouldn't move to acquire Take-Two until the investigation was closed or until the 45 days expired.

Newsweek's Level Up legal affairs columnist, former FTC lawyer Justin Blankenship, wrote a new piece trying to pin down exactly what issues the FTC might be looking at. Though the specifics are not public record and not likely to be sussed out easily, Blankenship learned a few details - like where the FTC's greatest area of concern likely is, and whether Take-Two is risking a legal injunction to stonewall EA:

For one thing, a second request from the FTC is a fairly rare occurrence and often demands a mountain of information from the companies involved - in fact, Take-Two has resisted answering the request on the grounds that it's just too much unnecessary stuff and would cost them too much time and money.

But Blankenship's details suggest there might be more to that story:

The gist of it appears to be that Take-Two had an agreement with the FTC to search for responsive documents in the files of certain individuals. But after hiring a new law firm, Take-Two has apparently reneged on that initial agreement, and has on several occasions narrowed the scope of the search that it is willing to perform even further.

Although the target of an FTC investigation has some grounds to object to a second request on the basis that it's unduly burdensome, the Horwitz affidavit tells the story of a corporation that's gone beyond making good faith objections based on scope. Take-Two appears to be simply stonewalling.

It's certainly a viable speculation that Take-Two is simply buying time in order to hold off EA after negotiations have fallen apart. The Federal Court has already demanded to know why Take-Two hasn't ponied up the info - and if they continue to withhold, the FTC could seek a preliminary injunction in Federal Court, which could delay the acquisition until the FTC gets what it wants - but not permanently.

It actually doesn't make a lot of sense for Take-Two to do that, as Blankenship's article explains:

You would think that as the unwilling target of EA, it would be in Take Two's best interests to hand everything over to the FTC as soon as possible with every incriminating quote already highlighted, complete with its own commissioned economic study about how EA would destroy competition in sports videogames, all wrapped up with a pretty red bow.

As all of the commenters here at Kotaku who've been following this story have speculated:

Not surprisingly, the FTC's investigation appears to be focused on "competing titles for simulated sports games, including basketball, football, hockey, and baseball."

Specifically, said Blankenship, with Take-Two holding the Major League Baseball exclusive while EA's got Madden, consolidating the basketball and hockey overlap just might choke the competition out of the sports game genre.

The Law and the Short of It: Level Up Legal Affairs Columnist Justin Blankenship Returns to the Scene of Electronic Arts' Bid For Take-Two [Level Up]

"At the time of EA's highly conditional, unsolicited tender offer, we emphasized our board's commitment to explore all strategic alternatives, including remaining independent, and pursuing business combinations with third parties... we're actively engaged in that process now."

"In fact, we have had and continue to have formal discussions with a number of interested parties," Zelnick said.

Zelnick's comments follow numerous earlier statements he'd made that Take-Two would entertain talks with Electronic Arts following April 30th, but he declined to specify in detail who the other interested parties might be or what stage the discussions were at. When questioned by an analyst, Zelnick clarified that they were "discussions, not negotiations."

A peek at recent SEC filings reveals another item of interest: When EA made its most recent deadline extension, its third, it stated that 6,210,261 shares of Take-Two stock had been tendered to EA as of May 16th. That's only a small percentage of what EA would need to acquire a majority - but its even less than they used to have.

At the time of the second extension, as of April 17th 6,432,787 shares had been tendered - which seems to suggest that 222,526 shares have gone back to Take-Two. Granted, those 222,526 shares are statistically tiny in the grand scheme of things, but even a small loss of stake seems an inauspicious sign for a company making a hostile bid.

On the other side of the coin:

The rise-and-fall pattern of Take-Two's stock seems nonetheless to follow the movements of EA. It traded at only about $17 per share at the time EA announced its bid, and only began to climb thereafter. The stock has seen highs just ahead of each bid deadline, and began its ascent to its current high just after EA announced it had borrowed $1 billion to give it "options" in financing the possible acquisition. Wedbush Morgan analyst Michael Pachter has suggested previously that such stockholder patterns might indicate anticipation for the completion of a successful transaction.

The record-setting launch of GTA IV failed to have a noticeable impact on the share price, either, lending credence to the perspective that, failing an acquisition by EA, Take-Two's stock would lose a great deal of the value it gained on the possibility.

EA has stated publicly on numerous occasions that this latest extension will allow the FTC to continue reviewing the potential business combination, and EA has also said that the longer this fight drags out, the less likely it is they'll pursue it, no matter what the reason for delay is.

"The thing for us is that further delays... could affect the value of our offer," corporate development VP Owen Mahoney told Kotaku in April. That statement appears to be proven accurate, as the degree to which Take-Two's share price outvalues EA's offer continues to increase, while Take-Two continues planning ways to raise the less-concrete but nonetheless essential value of its owned IP - the announcement of a BioShock film, for example, certainly supports potential for sustained future growth for Take-Two.

So does this mean things look bad for EA's bid? Not necessarily.

Wedbush Morgan analyst Michael Pachter said that there are still many conditions to satisfy before a conclusion can be expected. Chief among these is the "poison pill" that Take-Two's management implemented. The board adopted a measure that says that anybody who buys more than 20 percent of the company's shares after April 7th is limited in the number of votes they get in the company. In other words, if EA won the company, they wouldn't be able to control it.

"Nobody will tender until all conditions are satisfied," Pachter told Kotaku. "The biggest is defeating the poison pill, so you should not expect the shares tendered to remain tendered. Those that were tendered subject to the closing condition
(which has NOT been met) are free to withdraw their tender and sell at a higher price in the open market."

Calling the back-and-forth shareholder trading continuing at present "pretty irrelevant," Pachter said he expects plenty of people to tender to EA once all the conditions up in the air are satisfied.

"At the conclusion of this process, it will end up as a friendly deal at a higher price," Pachter said.

"Chair's stylized approach to creating games is further enhanced by their ability to stretch our technology in new directions that not only help in creating amazing gaming experiences but also demonstrate the power and versatility of the Unreal Engine," said Epic VP Mark Rein. "We are thrilled to bring the Chair team into the Epic family, and look forward to working with them to create original new games that continue to innovate and inspire."

Chair was founded in 2005, led by directors Donald and Geremy Mustard and CEO Ryan Holmes. Prior to launching Undertow on XBLA, Chair collaborated with author Orson Scott Card on its Empires property, with games and feature films planned around the novel Card wrote in 2006.

"Our team has long admired Epic for its ability to shape the game industry with its innovative technology and first-rate video game offerings," said Chair's Holmes. "We share Epic's passion for creating ground-breaking game play experiences and are excited for the opportunity to partner with a truly visionary company."

According to the latest SEC filing, EA has not raised its bid, as some analysts had speculated it would. The offer remains at $25.74 per share, and as of the time the filing was made, the company reported that only 6,210,261 shares had been tendered to EA - to acquire a majority stake, EA needs more than five times that many.

"Extending our offer will allow the FTC review process to continue," said EA VP of corporate development Owen Mahoney. "EA's offer price remains unchanged at $25.74 per share and our offer is still subject to conditions that include regulatory approval. As stated earlier, we retain the right to terminate the offer if the conditions are not satisfied."

Following EA's extension announcement, Take-Two executives also issued statements:

"This is the same highly conditional proposal that EA offered Take-Two stockholders on March 13, 2008, which our Board of Directors thoroughly reviewed and unanimously determined to be inadequate and contrary to the best interests of Take-Two's stockholders," said Take-Two Board chairman Strauss Zelnick, stating again that he recommends stockholders not tender shares to EA.

"We said we were willing to begin formal discussions with interested parties on April 30, following the launch of Grand Theft Auto IV, and we have in fact begun that process," Zelnick said.

Take-Two CEO Ben Feder said that GTA IV's record-breaking launch, along with recently-announced plans to develop a BioShock feature film , [demonstrate] how Take-Two is delivering value from our powerful and wholly-owned intellectual property. The small number of shares tendered into EA's offer to date demonstrates that our stockholders agree with what our Board has maintained from the beginning: EA's proposal undervalues our Company."

First off, there's no shame in being the type whose eyes glaze over every time you hear something to do with "the market" or "analysts" or "diluted shares," and since this ongoing saga contains these phrases at several junctions, you may want to start with the easy, albeit detailed, summary of the whole works we recently wrote for you.

Still with me? Hit the jump for your handy roundup of our recent coverage:

To summarize, EA believes it's made a "full and fair" offer for Take-Two at $26 per share; Take-Two says it's not enough, and that's where the two have stood ever since the offer was made in February. EA's initial deadline to seal the deal expired on April 18th; EA then modded its offer with an extension that will hold them until Friday.

A couple of things have changed since the saga began. First, many expected the record-breaking release of GTA IV to be a game-changer; it wasn't, despite what Take-Two board chairman Strauss Zelnick said, save for a handful of change gained on Take-Two's per share price, which has been vacillating around the $26 price point since EA's offer. Before EA made its bid, Take-Two seemed stuck at $17 a share.

Second, EA's $2 billion dollar offer is now worth less per share than it was at first, thanks to some extra shares handed out as part of Take-Two's management compensation package. The new $25.74 per share price is due to dilution, not a reduction on EA's part - but it still presents an additional obstacle, considering that Take-Two's stock has remained higher than that for a few weeks now.

Both companies are taking a hard line, and all tricky issues of monetary valuations aside, each has a valid viewpoint. Zelnick believes Take-Two's current lineup and stable of talent gives it much more value than the EA bid gives it credit for, and he made an uncharacteristically impassioned plea to this effect during Take-Two's annual shareholder meeting.

EA, on the other hand, is playing it cool, noting during its own annual meeting yesterday that its sports portfolio is robust, its "city-state" label structure is diverse, and that it has no need to break its back to gain Take-Two. EA has also said repeatedly that the longer this battle goes on, the less it's all worth to them, despite feeling that Take-Two's are "some of the best studios in the world."

Most recently, EA borrowed $1 billion in extra capital from several lenders to afford them "maximum flexibility." Following that announcement, Take-Two's stock made a climb to $27 per share, indicating investors feel EA's bid looks likely.

Cowen and Co. analyst Doug Creutz recently put the odds of the deal going through at 80/20, for example, provided EA raises the offering price one more time. Wedbush Morgan's Michael Pachter doesn't think EA needs to offer more money without negotiating first, but both analysts agree that the deal has too much upside for both parties to walk away.

Will the delay-despising EA extend its offer once again at the end of this week, or will it extend and raise it, as some analysts have told us they must - and can afford to? We'll see.

According to TechCrunch, the draw for EA is Rupture's technology infrastructure, not its userbase, because as to the latter there apparently ain't much to speak of yet. The service apparently stalled in beta and never launched a second version. In other words, Rupture's not good for much - except as a ground on which EA could build a social network around multiplayer online games.

From TechCrunch:

Presumably, creating social networks around massively multiplayer video games is a key component of its online strategy. The company has not yet officially announced the acquisition, but it is expected to do so soon. [Update: The closing of the deal is imminent, but there are still some papers to sign].

EA declined to comment on the report.

Shawn Fanning Finally Gets A Real Payday: Electronic Arts Buys Rupture For $30 Million [TechCrunch]

What does this mean for EA's ongoing bid for Take-Two? Cowen and Co. analyst Doug Creutz said this morning that even the GTA IV launch couldn't have elevated the share price from January's 17 dollars per share to its current 26-dollar range, and that right now the elevated price is due to investor eagerness for the sale.

"Take-Two's self-imposed moratorium [on negotiations] is over," said Creutz. "We haven't heard anything out of either company in the last week. They could be talking... I still think the odds that the deal happens that are very high... I don't think GTA changes that at all."

Just how high are those odds? EA continues to point to the ticking clock, and just recently told GamesIndustry.biz that the chances of a deal happening are "now 50/50 at best."

"I think it's more like 80/20," said Creutz.

To understand the likelihood, Creutz cites an example from elsewhere in the market. Adjacent to this ongoing battle, we've seen Microsoft launch a similarly aggressive bid to acquire Yahoo! — and fail. But according to Creutz, the EA-Take-Two bid is an opposite scenario in every way. "EA's shareholders want this deal to happen; they understand how potentially accretive this deal is," he said.

"If you compare this to Microsoft and Yahoo!... Microsoft shareholders didn't really want the deal, and Yahoo!'s management wanted to stay in charge. EA shareholders do want this, and Take-Two management have a lot of incentive to cash out so they can move onto the next project."

A Take-Two spokesperson said today that the Board will do "the right thing" for its stockholders: "Toward that end, we are committed to a process of considering all strategic alternatives to maximize stockholder value, including remaining independent. We have said that we were willing to begin formal discussions with interested parties on April 30th, after the launch of GTA IV, and we have continued to observe that timetable."

The spokesperson also reiterated it had received interest from "various parties" since the EA bid went public, but analysts have repeatedly noted a so-called "white knight" has yet to appear.

Creutz is of the opinion that EA will have to bid a little higher to make the deal happen. "EA can cut a lot of costs [in the event of an acquisition]," he said. "They don't have to have Strauss [Zelnick] and Ben [Feder] around; they can get rid of the corporate overhead. There's a lot of cost synergy with sales and marketing reorganizations and probably on the R & D side. A deal has the potential to add a lot to EA's earnings power; because of that, they can afford to pay more."

So why hasn't EA raised its bid? "You don't go public with your best offer; it's negotiating 101," said Creutz. "I think EA's willing to raise the bid once to get it done, but they have to take a hard line, otherwise Zelnick is going to walk all over them. Zelnick has to play it the same way."

"It's a game of chicken. Neither of them really wants to lose here, and neither of them wants this to blow up."

Are the parties talking? What does Take-Two consider an adequate offer? "We are not going to comment on specific conversations with third parties, nor will we speculate about the 'right' stock price," said the spokesperson.

Creutz also suspects bravado has a big role to play in this "game of chicken" — "If this deal doesn't happen, it's because egos got in the way, and both sides are going to walk away feeling a little stupid that they let this slip through their fingers," he said.

EA's Jeff Brown was unavailable for comment.

Analysts, of both the professional and the armchair varieties, suspected that Take-Two's stock was set to take a big leap with the major title launch, thereby forcing EA to raise its offer. And it's true that Take-Two's stock has drifted up a little bit higher this week to over $26 per share by a handful of change, trumping EA's current offer of $25.74.

Talking to the New York Times recently, Strauss Zelnick says the increase proves the wisdom of his strategy. Some possible flaws in his logic, however, make the situation a little less clear-cut.

Zelnick told the Times:

"The critical and consumer response to Grand Theft Auto IV vindicates our strategy of waiting until the launch with regard to E.A.'s offer," said Strauss Zelnick, the chairman of Take-Two, in a statement.

Enthusiasm and high critical acclaim for GTA IV leading up to its launch has been unavoidable (as Kotaku readers have doubtless observed in spades). We haven't seen North American numbers yet, but we know it's broken records in the UK. With that in mind, though, wouldn't you expect to see a bigger price jump for the stock than just a little bit of pocket jingle?

Moreover, the increase in Take-Two's share price over the last week pales in comparison to the boost it saw following the EA bid; prior to that, it was trading at a much less-robust $17 per share. As of press time today, the stock has been malingering throughout the morning, sagging slowly back closer to the even $26 mark, and over the past few days, three major analyst groups - Citibank, Janco Partners and the Cowan Group - have downgraded their recommendations from "buy" or "outperform" to either "hold" or "neutral."

EA's Jeff Brown also talked to the NY Times:

"We've seen a share price above and below our offer and it doesn't change anything. We knew the game would be an extraordinary success," said Jeff Brown, a spokesman for Electronic Arts. "All of that was factored into our offer of $2 billion."

So one thing remains the same: Zelnick says EA's shafting him, EA says it isn't. Zelnick may feel vindicated while the stock is over $26 - but if the stock continues to slide rather than climb in the wake of GTA IV's release, as some analysts have suggested it might, he may need to reconsider. Neither Take-Two nor EA look about to blink in this staring contest, though.
Grand Theft Auto IV and Real-World Billions [NY Times]

Yesterday Take-Two's stock nudged up over $26 per share, a higher value than EA's $25.74 per-share bid. But EA's Mariam Sughayer, senior manager of Corporate Communications, says the company's looking further down the line — despite predicting that GTA IV is the likely contender for game of the year.

"We believe our offer is based on the long-term valuation of the people and franchises that make up the TTWO - not a one-time event within an important franchise," Sughayer said. "In addition — we believe that TTWO's price prior to our offer already reflected that this would be a global blockbuster - the stock was trading at approximately $17."

She added, "We expect GTA IV will be a huge blockbuster - and #1 game of the year."

As of market open on launch day, though, Take-Two has not seen any further resurgence in its share price, sticking firmly within the range of $26-and-change. This lends credence to the argument put forth by EA and many industry analysts that the highly-anticipated commercial success of GTA IV is already reflected in the share price.

Cowan Group analyst Doug Creutz agrees, commenting, "We expect the release of the game to have a minimal impact on TTWO share price, as it continues to be driven by arbitrageurs on the likely outcome of the outstanding Electronic Arts tender offer."

Take-Two has said multiple times that it wouldn't entertain any discussions on a potential acquisition until after the launch of GTA IV — which means the two companies could sit down and confab together as soon as tomorrow.

For his part, Creutz believes the acquisition is likely regardless of how GTA IV sells, if EA raises its offer a little: "We continue to believe that the most likely outcome is a sale price in the $28-30 range, and do not believe that the success of GTA IV is likely to impact this meaningfully," he says.

Wedbush Morgan analyst Michael Pachter saw that similar February spike as a vote of confidence from the shareholders that the acquisition was likely to go through. This time, though, with the state of the buyout apparently in limbo until May 16th, the climb in stock price looks likely due to a voluminous wave of super-hyperbolic positivity from reviewers regarding the imminent GTA IV.

Stressing that their offer is "full and fair," EA senior VP of corporate development Owen Mahoney recently said that any GTA IV-related spikes in Take-Two's share price would be "a short term event," since he agrees with the analyst opinion that investors have already considered the value of GTA IV.

Neither EA nor Take-Two have yet responded to requests for comment on what, if anything, the elevated share price might signal for the ongoing bid.

"What we can do is take these diamonds, and really involve them in an organisation that does have global scale and that can help to work them to maximise the total effectiveness for the true market horsepower that their titles can have in the global marketplace."

EA keen on Take-Two "diamonds" [GameIndustry.biz]

"[The question is] can we get to the scale that we want to more quickly if we work with someone [in Japan] that actually has had success in the market," said Mr Niermann [president of EA Asia]. "I think EA offers a great global distribution opportunity in terms of taking Japanese products to other parts of the world and in turn there are certainly companies that are much better at local development than we've ramped up to be."

While I get the logic behind the mad rush for the potentially lucrative Chinese market, it does seem odd that some companies are just cluing into the fact that maybe - just maybe - they should be tapping into the already large-and-extant Japanese market.

EA hunts for Japan game outfit [MSNBC]

For Immediate Release

SUMO DIGITAL TO BE ACQUIRED BY FOUNDATION 9 ENTERTAINMENT

Transaction marks F9E's first expansion overseas

NEWPORT BEACH, CA - August 20, 2007 - Foundation 9 Entertainment announced today that UK-based Sumo Digital, along with its recently established Indian development facility, will be joining the F9E family of studios. The transaction will mark F9E's first expansion outside of North America and strengthen the company's ability to deliver top titles across multiple gaming platforms and genres.

"The team at Sumo has done a tremendous job building a world class studio in a relatively short amount of time," said Jon Goldman, chairman and CEO of F9E. "By bringing them into our family of existing studios, we're now able to tap into the vast talent pool of game developers overseas and expand the company's presence in the sports and racing genres."

Since its founding in 2003, Sumo has developed a number of critically-acclaimed titles, including Virtua Tennis 3 for Xbox 360(TM), Super Rub 'a' Dub for PLAYSTATION(R) Network, and Outrun 2006: Coast to Coast for multiple platforms. Sumo is based in Sheffield, with an additional office in Pune, India. Sumo is currently working on a number of unannounced titles for major publishers.

"We're excited to join Foundation 9 and help expand its European presence," said Sumo CEO James North-Hearn. "We believe joining F9E will bring us tremendous opportunities for growth in the future, as well as the chance to offer many more great games to our publishing partners." As part of the deal, North-Hearn will transition into the position of Managing Director, Foundation 9 Europe, overseeing all European operations.

Sumo Digital will join F9E's current studios and brands: Amaze Entertainment, Backbone Entertainment, The Collective, Digital Eclipse, ImaginEngine, Pipeworks and Shiny Entertainment. F9E develops in multiple genres for all platforms and age groups, and has shipped more than 400 titles, including many bestsellers.

The company's studios are currently at work on more than 20 titles, including The Golden Compass, to be published by SEGA(R), and Godzilla(R): Unleashed, to be published by Atari, Inc. The transaction is expected to close in the third quarter of 2007. Terms of the transaction were not disclosed.