Take-Two shares soar above Electronic Arts bid price

NEW YORK (Reuters) - Shares of Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research) jumped 52 percent on Monday, suggesting Electronic Arts Inc (ERTS.O: Quote, Profile, Research) or another rival may have to sweeten a $1.9 billion offer for the "Grand Theft Auto" publisher.

"We believe there is a good chance that the deal could get done at a higher price than the current offer," Cowen & Co said in a note. "We believe Electronic Arts views Take-Two as a strategic asset and may be willing to pay slightly, but not materially higher than its current offer."

Take-Two shares climbed $9.07 to $26.43, above Electronic Arts's all-cash offer on Sunday of $26 a share, which it has characterized as "friendly". Take-Two called the offer "inadequate."

Several Wall Street analysts upgraded their opinions of Take-Two, including Wedbush Morgan Securities analyst Michael Pachter who lifted the stock to "hold" from "sell" and said he believe that Take-Two's investors will find "that a sale is the best option for them."

"We were shocked and awed by the offer, and our Sell recommendation was wrong. After numerous rumors over the past several years surrounding an acquisition of Take-Two that have been dispelled, a bona fide serious offer has been made," he said in a client note.

EA said it made the $26-per-share proposal after an earlier offer at $25 was rejected by Take-Two. EA said the rejection of the proposals by Take-Two's board prompted EA to make its offer public to appeal to Take-Two shareholders.

"It is our objective to make this a friendly deal. Our next steps, we would love to sit down with Take-Two management and the board of directors and complete a transaction," EA Chief Financial Officer Warren Jenson said in a conference call with analysts on Monday.

The bid is EA's answer to Activision Inc's (ATVI.O: Quote, Profile, Research) $18 billion merger with the gaming unit of French media and telecoms giant Vivendi (VIV.PA: Quote, Profile, Research). That combination, announced last November, is set to challenge EA's long-standing industry dominance.

The offer follows months of speculation that Take-Two would be acquired by a major games publisher or media firm, with News Corp (NWSa.N: Quote, Profile, Research) and Viacom (VIAb.N: Quote, Profile, Research) often mentioned as possible suitors as they eye the fast-growing video game industry.