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."

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]

Forbes magazine thinks it knows who the other contender could be - Ubisoft, after ruling out Activision, who's already rather busy with a very big impending merger with Vivendi.

There are a few reasons why Ubi might be a good bet:

Well, for one thing, Ubisoft's profits are on the rise, reaching a "record high" for fiscal 2008. In March, the publisher reported a doubling of its income to $172.45 million, along with $1.5 billion in sales. Despite its past troubles, Take-Two is pretty top-tier, and very few of its fellow publishers could reasonably afford it - but Ubi's new numbers make it look more feasible for them.

Forbes adds:

In recent interviews with Forbes.com, Ubisoft North America's president, Laurent Detoc, has indicated the company is moving away from a pure games-based business in favor of what it hopes will be long-lived brands, extended across all forms of media. For instance, Ubisoft is developing a TV series and building a computer-generated imagery studio. A Prince of Persia movie, based on the game franchise, is also in the works.

There's a lot at Take-Two that could dovetail with Ubisoft's interests.

And Ubisoft has been diversifying, expanding into several genres - but as Forbes points out, their sports presence is pretty weak, with only Shaun White Snowboarding in the pipeline. They could really use Take-Two, then.

Forbes also asked an analyst:

"Ubisoft has shown they do a good job of managing original intellectual property. Culturally, Take-Two developers would not have a problem at Ubisoft because they allow a decent degree of creative freedom," says Doug Creutz, analyst at San Francisco firm Cowen and Co.

Michael Pachter also told Forbes he thought Ubisoft and Take-Two might be a good match. But I've discussed the same matter with Pachter and other analysts myself, and it's likely that once EA gets FTC clearance for the merger, they'll be forced to raise their bid into the $30 per share range, territory that Ubi might be very hard-pressed to top.

Still, on that results call, Zelnick was careful to clarify that while Take-Two may be in other merger discussions, nothing has progressed to the negotiation phase.

Take-Two's EA Alternative [Forbes.com]

"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."

Under the agreement, no transaction will be completed until the FTC has finished its probe, which can take up to 45 days instead of the customary 30.

"We've entered an agreement with the FTC to modify the scope," said an EA spokesperson. "This is a normal part of the review process, which allows us to move through the review as expeditiously as possible while giving the FTC additional time in which to complete its full review and work."

At the time EA last extended its tender offer until June 16th, corporate development VP Owen Mahoney said the extension would allow the FTC further time to complete its investigation. However, there are only 7 business days between now and the expiration of EA's current offer, not 45 - so it's reasonable to infer EA will extend its offer again to allow the FTC to fully complete its probe.

EA declined to comment on plans to extend the offer, but the spokesperson said, "You'll hear from us on or before the expiration."

The FTC also does not comment on the specific details of individual investigations.

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.

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."

So ... now what? Analysts quoted in a Friday San Francisco Chronicle story still think the deal will get done. Michael Pachter cited the Wall Street Journal story that places Rockstar's Dan Houser in the pivot, as his contract with Take-Two is up next year and he's open to EA ownership. Pachter's reasoning: Houser would broker the deal in hopes of being rewarded by his new employer. EA talks about how GTA IV's success was already built into its offer to Take-Two, so surely GTA IV's success is already built into Take-Two's relationship with Houser. A grateful EA might be willing to throw in a premium Houser couldn't negotiate otherwise.

Even though the deadline was not extended, as some suspected, that by itself doesn't preclude another offer. Weekend deadline negotiations are usually for labor unions and management. They certainly aren't covered by amateurs like yours truly, or the Agence France Presse writer who called the game "Grand Theft Auto IV: Liberty City Stories." We're not that well sourced. Once the regular writers and analysts get back in the office this week, someone will say something.

Deadline Passes in EA Bid to Buy Take-Two [AFP/Yahoo News, via Joystiq]

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.

Holographic... interface?

Riccitiello also promised that the next NBA Live would take "a huge step up," with new features set to be unveiled at E3.

EA seems enthusiastic about its sports franchises, and Riccitiello says he expects EA Sports will help drive the company to an additional $1 billion in revenue and an 100 percent increase in operating income. Riccitiello was optimistic about the company's studio structure in general, also listing big things ahead for the Sims Studio: Two sequels for MySims, a new SimAnimals title, and the launch of The Sims 3.

"Our fiscal 09 operating plan keeps us on track to achieve our fiscal year target - even without Take Two," Riccitiello said.

During the same call, EA Games label president Frank Gibeau also expressed positive sentiments about EA's "city-state" label structure. "We have restructured... from a top-down and centralized model to a federation of highly creative teams, each with our own culture and vision," he said, noting a broad range of studios and properties from EA Mythic's Warhammer to Battlefield and Mirror's Edge at DICE.

Riccitiello was largely unable to comment on the specific state of the Take-Two acquisition, however. "We're obviously contained pretty clearly in what we're allowed to talk about," he said. "Our offer currently stands at $25.74 a share, or $2 billion dollars, and our valuation took fully into account the success of GTA... we'd anticipated a result much like what happened in the market."

"It's a spectacular game - I'm enjoying playing it - and offer enormous congratulations to the Rockstar team."

"There's no news here," said EA VP of communications Jeff Brown. "This is just a process point on something we announced in February."

With $2.3 billion on hand in cash, cash equivalents and short-term investments, EA already has the funds available to do the deal as it currently stands. With the deal not contingent on financing, why borrow more money?

"It helps us maintain maximum flexibility for any opportunities," said Brown.

Take-Two had no comment as of press time.

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.