EA says has complied with FTC request on Take-Two
SAN FRANCISCO (Reuters) - Video game publisher Electronic Arts Inc (ERTS.O) said on Tuesday it complied with a regulator's request for more information on its Take-Two Interactive Software Inc (TTWO.O) bid, moving a step closer to buying its rival.
The U.S. Federal Trade Commission, which is reviewing their potential merger on antitrust grounds, now has until August 21 to end its probe.
Last month, EA agreed with the FTC not to complete a deal with Take-Two before the regulator gave the go-ahead, or 45 days after the date of its "substantial compliance," whichever was earlier.
EA said in a regulatory filing it would now not proceed with its proposed $2 billion acquisition of Take-Two, publisher of the blockbuster "Grand Theft Auto" game, before August 21.
EA has reached out directly to Take-Two shareholders through a tender offer, which it has extended until July 18 because of the investigation.
Take-Two has rejected the offer as too low, and company spokeswoman Megan Maise said that position remains unchanged.
"We are considering any and all alternatives which will deliver greater value to stockholders than the current EA offer," Maise said in an e-mailed statement.
Shares of EA rose 3.5 percent in Nasdaq trading, while Take-Two shares rose 2 percent.
Analysts attributed the share moves to arbitrage traders who buy and sell shares of companies in takeover talks to make money on small price differences. These "arbs" collectively hold a vast amount of Take-Two stock -- Wedbush Morgan analyst Michael Pachter estimated their share at about 70 percent.
Investors reacted to the latest news as a "positive development," Pachter said, because the 45-day timeframe now puts a deadline on a deal that has dragged on for four months.
"There's a very high likelihood of FTC approval," he said, estimating the deal could get done by the end of September.
But Kaufman Brothers analyst Todd Mitchell said there had been no signal from either company that a deal will get done. "The arbs are getting antsy," he said.
Separately, Activision Inc (ATVI.O) said on Tuesday its stockholders had approved a combination with Vivendi Games (VIV.PA), which Mitchell said may also be helping EA and Take-Two shares.
EA initially offered $26 a share for Take-Two in March, but later lowered it to $25.74 per after Take-Two shareholders approved an incentive stock plan for executives in April.
Shares of EA were up $1.54 at $45.92 in afternoon trading, while Take-Two shares were up 46 cents at $24.45.
(Editing by Gerald E. McCormick and Braden Reddall)
