Pachter on EA-Take-Two buyout: “This deal is happening”

By Patrick Garratt, Monday, 25 February 2008 06:44 GMT

Speaking here, Wedburn Morgan analyst Michael Pachter is under no illusion that EA’s now hostile bid for Take-Two has a strong chance of completing.

“By going public, EA is telling you, ‘This deal is happening,'” he said. “The only way you can credibly reject the deal is if there’s a better one behind it,” Pachter said. “I don’t see how anyone can afford to pay this much or more for the stock.”

EA released details of a $26 per share offer for the GTA publisher last night, a $2 billion that’s been rejected by the Take-Two board, a move Pachter clearly thinks was a mistake.

“The share price on Friday tells you that investors think the share price is $17,” he said. “So an offer of $26 by definition is more than adequate. And if the only argument management makes is that they have a turnaround plan and to give them time… It could take two or three years for them to get [the stock price] to that same $26. Who in their right mind thinks $26 three years from now is better than $26 today? This is a bird in the hand.”

He went on: “There’s only one company that can make sense out of an acquisition of Take-Two, and that’s EA. For anyone else to buy Take-Two, they’d have to decide either to bloody themselves competing in sports against EA, or shut down the sports business and give up. Either way, there aren’t many people who are going to pay a premium for the right to engage with EA or shut down that business.”

There’s now no deadline for any deal to go through, as Take-Two has rejected the EA bid, forcing the EA to buy enough shares on the open market to take control of the company.

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