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.

EA buys Chillingo for under $20 million

From the LA Times today:

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/10/ea-buys-iphone-game-publisher-chillingo.html
   Electronic Arts has snapped up Chillingo, a U.K. publisher of Angry Birds and other iPhone and iPad games, for less than $20 million in cash, according to sources close to the deal. Holly Rockwood, EA's spokesperson, confirmed the purchase Wednesday morning, but would not comment on the acquisition amount.

   Chillingo is an aggregator and a distributor of mobile games based in the United Kingdom. Continuing from the LA Times article: 

   Its two top titles, Cut the Rope and Angry Birds, occupy the No. 1 and 3 spots on the chart of top paid apps in iTunes Wednesday morning. Cut the Rope, developed by ZeptoLab, sold 1 million paid downloads within the first 10 days of release on Oct. 7. Neither Rovio, which developed Angry Birds, nor ZeptoLab is part of EA's acquisition.

   I think the deal is a "Meh" kind of buy. I like that EA's buying into new areas of strength in the gaming industry but as I've mentioned before, console gaming will always be where the big money and revenue is. All Things D had pegged the Chillingo buy at $80-$200 million which was optimistic but ~$20 million sounds about right for a morsel to be absorbed into the EA juggernaut. I also think EA should buy into online gaming distribution and that's Valve which operates Steam.

   In related news, I've completed my buys into EA earlier this morning - a total of 5000 shares which will be held in the account for the next 5 years. I might write out-of-the-money calls against the position about 3 times a year to earn income but those shares won't be sold until 2015-2016 depending on how I view the overall market at that time. I'm concentrating on my Amazon position from here on out.