Reaction has been swift to yesterday's report that EA was giving up on its quest to acquire Grand Theft Auto publisher Take-Two Interactive.
As GP predicted yesterday, Reuters is now reporting Take-Two's stock price has plunged. Indeed, from Friday's close just under 22, as I write this the stock [TTWO] has dropped to 16.44. On the other hand, the market as a whole is experiencing a broad sell-off today as shockwaves from the collapse of Lehman Brothers and the purchase of Merrill-Lynch ripple through Wall Street. At the same time, EA [ERTS] stock is also down from Friday's closing price of 44.99.
Reuters quotes UBS analyst Benjamin Schacter on the EA-T2 situation:
While (Electronic Arts) will not reveal details about its exact reasons for walking, the fact that it did not make any offer after further due diligence will certainly raise some eyebrows.
In our view, Ubisoft could be a logical buyer, but a deal would not be easy. Traditional media companies as well as Asian video game publishers-operators might also be interested, but we don't believe that these players are likely to even match EA's prior offer given that none would have synergies in the sports genre.