Friday, October 29, 2010

Take Two Rallies on Acquisition Speculation

   Shares of Take-Two rose 4.71% today to $10.67 on speculation that the company could be a takeover target. How did traders get the idea that TTWO was in play? The company announced earlier this morning that CEO Ben Feder would be leaving his position at the end of the year. Sounds like a bunch of hokum. Back in 2008, EA attempted to take out Take-Two at $25.74 per share which valued the company at about $2 billion. As of today's close, TTWO's market cap is $906 million. At the lows of March 2009, TTWO was worth about $450 million. Amazing how the value of companies can bob like a jetty in rough surf in the space of 2 short years. 

   I don't put much stock in the takeover talk. Trigger-happy traders jump on a lot of shit which usually doesn't pan out. EA's market cap is about $5.5 billion so if they were to make a play for TTWO again, they'd probably have a pay at least a 30% premium to TTWO's closing price for today. That's $1.2 billion and in my opinion, unlikely to pass. Who else could make a run for TTWO? Activision is one possibility and maybe Ubisoft - I'm bearish on Ubisoft so an acquisition announcement would be good fodder for the way I'm thinking on UBI since they'll get smashed.

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