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Has GTA IV saved Take Two?
I was quoted extensively in MCV this week talking about the future of Take Two (full text below, because they are a quaint offline magazine).
The main question I was asked was whether GTA IV had “saved” Take Two. I think that the clear answer is “no”. EA offered to buy Take Two mainly because it owned GTA IV. Nothing GTA did could have “saved” Take Two from EA’s bid except if it were an enormous flop. In which case EA would probably decide that it didn’t want Take Two anyway, its bid (which is supporting the share price with a floor of $26) would go away and Take Two’s value would have nose-dived. That’s not really “saving”.
None of this happened, GTA IV was the biggest selling media launch ever and the share price barely moved.
So Take Two is not safe. Its release schedule for the rest of the year is not fantastic and GTA IV didn’t make a meaningful difference to its market value. And the fact that EA was unable to get the GTA IV sales in its financial results may not be enough either: GTA III was a great game but the sequels Vice City and San Andreas were substantial moneyspinners too. And it’s a fair bet that Rockstar has similar sequels in the pipeline for GTA IV. Which I’m sure EA would still like to get their hands on.
So I stick by my view – Take Two is likely to get bought by EA or need to find a white knight. And there aren’t that many of them around.
GTA IV won’t save Take Two
by Jonathon Harker
Top industry analyst Nicholas Lovell has said that despite the huge success of GTA IV, it won’t save Take Two from EA’s advances, with the publisher needing a “white knight” to step in to save it.
Lovell said the GTA IV launch has had “no meaningful impact” on the firm’s value, as the market had already factored its success into the share prices.
“I don’t believe that the success of GTA has saved Take Two. EA says Take Two is worth $26 a share. The stock market says it is worth up to $27.95,” Lovell told MCV.
“That’s not a very big difference, and it still seems likely that investors would seek the certainty of EA’s cash over the uncertainty of Take Two’s shares, especially now GTA has been released. However, it seems as if a number of investors have not yet taken the bait, and the Financial Times reports that few investors have snapped up the offer,” added Lovell.
“I don’t think they’ve staved off a takeoever, I believe that EA might need to sweeten its offer to $28 to convince the waverers, and I think that Take Two is either going to be bought by EA or will need to find a white knight to merge with or be bought by.”