Analyst Predicts New Take-Two Takeover

[Andy Chalk]

Analyst Predicts New Take-Two Takeover

The successful launch of L.A. Noire [http://www.amazon.com/L-Noire-Playstation-3/dp/B002I0J5UQ/ref=sr_1_1?ie=UTF8&qid=1306257693&sr=8-1] and the inexorably approaching announcement of Grand Theft Auto V has resurrected talk that publisher Take-Two Interactive will soon become the target of a takeover.

Remember a few years back when Take-Two and Electronic Arts tussled over an unfriendly acquisition attempt that ultimately saw T2 remain independent and saddled with a share value of roughly one-quarter of what EA had offered? The back-and-forth broadsides between the two companies were a source of much drama and fun, and according to Sterne Agee analyst Arvind Bhatia we may soon hear those cannons roaring once again.

The complaint about Take-Two has always been that it lives and dies on Red Dead Redemption [http://www.amazon.com/Grand-Theft-Auto-IV-Xbox-360/dp/B000FRU1UM/ref=sr_1_1?ie=UTF8&qid=1306257752&sr=8-1]. That increasingly well-rounded success is good for the company but could also make it, as Bhatia put it, "very attractive to a more prosperous suitor."

"With the strong launch of L.A. Noire last week, Take-Two has created yet another valuable franchise," he said. "With the GTA catalyst still ahead and the possibility of a takeout still a reasonable bet, we are reiterating our $19 price target which is based on our sum-of- the-parts valuation."

Bhatia also made the very interesting comment that it would not "materially change the company's intrinsic value" whether Grand Theft Auto V came out in Take-Two's 2012 fiscal year or was delayed into 2013 and that investors in the company "know that the risk of game delays and the accompanying earnings volatility is inherent to their investment in this stock." That opinion seems to fly in the face of a 2010 assessment by analyst Michael Pachter, who criticized the company [http://www.escapistmagazine.com/news/view/98858-Analysts-Say-Take-Two-Takes-Too-Long-to-Make-Games] for the overlong development cycles of its games.

Take-Two is currently trading at roughly $16 per share, dramatically lower than the $26 per share that EA offered in its initial takeover attempt but still a huge improvement over the $6.19 price it plummeted to in March 2009 after EA finally walked away [http://www.escapistmagazine.com/news/view/86258-EA-To-Take-Two-Up-Yours-Buddy].

Source: IndustryGamers [http://www.industrygamers.com/news/gta-publisher-buyout-a-reasonable-bet/]


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[mjc0961]

As long as both EA and Activision keep their dirty hands off Take Two, it shouldn't be that bad... Right?

 

[Azaraxzealot]

better not be activision. they'd run Grand Theft Auto into the ground.

Then Red Dead.

i really don't want to think of the cash-in-of-duty-fication of those franchises... i hope take-two stays as it is.

 

[GaltarDude1138]

Sterne Agee analyst Arvind Bhatia

Wasn't Bhatia the last name of that guy in Mass Effect who couldn't get his wife's body back?
*FORESHADOWING*

OT: At least if they do merge with someone, let it not be Activision. They have enough people who are talented that have signed their souls away (Looking at you, Bungie)

And by all means, take as much time as you want with GTA V, Rockstar.

 

[Pipotchi]

Remember Bullfrog and Westwood Studios, thats all I have to say about this. I think I might buy some shares of Take Two

 

[CheckD3]

Please lord don't let EA and Activision get their greedy, robotic and dullish hands on Rockstar/T2. Innovation and needed sales don't go well together in those two places, and L.A. Noire would have been butt fucked if it hadn't had the freedom that they had

Hey EA, want to know why you should leave them alone? Remember Activision's involvement in Infinity Ward that resulted in you getting 2 of their power houses? Well if you only want a few more successes from T2/RS and then have the company possibly go belly under like IW, you'll leave them alone, gaming can't lose them. Sure GTA is getting samey and Saint's Row 2 was better than GTA IV, but who cares, don't fuck with a winning formula, because adding yourself won't equal more money, it will just cock up everything and cause a lot of shit

 

[The_root_of_all_evil]

I think we're forgetting another big evil who could make a grasp: Ubisoft.

 

[CommanderKirov]

I'm still keeping my 2009 stock until they release Duke.

Than I'll see about keeping or moving them...

 

[RedBeta22]

I thought it was 2k that did Bioshock and Civ. What's the difference between the two companies? Are 2k and Take 2 the same?

 

[Hungry Donner]

Why do publishers think they can siply buy ideas instead of fostering them? Take 2 is so sucessful becuase the games it makes are original, passionately made and GOOD. If another corporate culture was to invade them it would kill what made them sucessful in the first place with simple name-mining and restircyions of 'risky' projects like any form of new IP.

This, exactly.

Sometimes being bigger gives you more options, but among publishers it almost feels like the opposite is true. Shouldn't a larger publisher be better able to take risks and promote indie games, while the smaller ones need to rely on safer, more mainstream titles?

I understand why the larger publishers are more risk-adverse but if they don't understand why publishers like Take2 are successful (or they are unwilling to replicate the atmosphere) they should keep their dirty mitts off.

 

[fozzy360]

This is coming from someone who knows jack shit about the market and business tactics and what not, but this just sounds, scary, for lack of a better term. I like the idea of having several publishers trying to make good games and competing with each other while doing so. Better and more game ideas floating around, you know? I get why a company or other publisher would want to buy Take Two, but I really hate the idea that it's even a possibility.

Why do publishers think they can siply buy ideas instead of fostering them? Take 2 is so sucessful becuase the games it makes are original, passionately made and GOOD. If another corporate culture was to invade them it would kill what made them sucessful in the first place with simple name-mining and restircyions of 'risky' projects like any form of new IP.

I agree with this, but what's sad is that publishers, for the most part, don't care about this. Buy another publisher with a major franchise that's guaranteed to sell, make yearly installments, rinse and repeat.

Lets take a look at 2K's IP creation from 2007; Bioshock, Red-Dead Redemption, L.A noir. Three big hitters in four years. Lets take a look at Activision; **Crickets**

At least Activision let Prototype come to be. I'll give them that.

 

[shadowmagus]

Why do publishers think they can siply buy ideas instead of fostering them? Take 2 is so sucessful becuase the games it makes are original, passionately made and GOOD. If another corporate culture was to invade them it would kill what made them sucessful in the first place with simple name-mining and restircyions of 'risky' projects like any form of new IP.

Lets take a look at 2K's IP creation from 2007; Bioshock, Red-Dead Redemption, L.A noir. Three big hitters in four years. Lets take a look at Activision; **Crickets**

Honest answer? Successful developers cause competition. Easiest way to remove competition? Buy them out. They don't "foster" them because to do so would mean putting their bottom line in jeopardy. If EA or Activision sees Take Two as a threat to their bottom line, best beleive they'll get snatched up real quick.

 

[Irridium]

Yes Take 2 takes a long time to make games. Yes its prime franchise is GTA, and yes they have few but strong franchises.

Do you know why their games sell well, why they're so well made? Because Take 2 gives them time. Take 2 gives the games the time they need to be great. There's no way Activision or EA would let the 3-5 year development cycle fly. And it'll result in poorer games.

I really hope nobody buys them. It'd run Take 2's franchises into the ground.

 

[JDKJ]

I thought it was 2k that did Bioshock and Civ. What's the difference between the two companies? Are 2k and Take 2 the same?

2K Games is owned by Take-Two Interactive.

 

[JDKJ]

Great! Now i'm kicking myself for not buying Take Two stock back in 2009

Depends on when in 2009 you would have bought it. Middle of June it was $7.50. Late October it was $12.20. Yesterday it closed at $16.45. Do the math and you can see that it's not just enough to get on the train. You gotta pick the right time to get on the train. Being a stock punter isn't for everyone.

 

[JDKJ]

Yes Take 2 takes a long time to make games. Yes its prime franchise is GTA, and yes they have few but strong franchises.

Do you know why their games sell well, why they're so well made? Because Take 2 gives them time. Take 2 gives the games the time they need to be great. There's no way Activision or EA would let the 3-5 year development cycle fly. And it'll result in poorer games.

I really hope nobody buys them. It'd run Take 2's franchises into the ground.

You're looking at it from the gamer perspective. From the investor perspective, longer development times equals greater development costs equals less profits equals less return on investment.

Not that you don't have a valid point. Just that there's another way to look at the situation.

 

[JDKJ]

Why do publishers think they can siply buy ideas instead of fostering them? Take 2 is so sucessful becuase the games it makes are original, passionately made and GOOD. If another corporate culture was to invade them it would kill what made them sucessful in the first place with simple name-mining and restircyions of 'risky' projects like any form of new IP.

Lets take a look at 2K's IP creation from 2007; Bioshock, Red-Dead Redemption, L.A noir. Three big hitters in four years. Lets take a look at Activision; **Crickets**

Honest answer? Successful developers cause competition. Easiest way to remove competition? Buy them out. They don't "foster" them because to do so would mean putting their bottom line in jeopardy. If EA or Activision sees Take Two as a threat to their bottom line, best beleive they'll get snatched up real quick.

And after ya acquire them, ya gotta strip out all the valuable assets, run up a mountain of debt in their name, then let them swirl down the crapper. No more competition and you're ahead of the game (pun intended).

 

[Irridium]

Yes Take 2 takes a long time to make games. Yes its prime franchise is GTA, and yes they have few but strong franchises.

Do you know why their games sell well, why they're so well made? Because Take 2 gives them time. Take 2 gives the games the time they need to be great. There's no way Activision or EA would let the 3-5 year development cycle fly. And it'll result in poorer games.

I really hope nobody buys them. It'd run Take 2's franchises into the ground.

You're looking at it from the gamer perspective. From the investor perspective, longer development times equals greater development costs equals less profits equals less return on investment.

Not that you don't have a valid point. Just that there's another way to look at the situation.

Yeah, yeah I know...

Just makes me sad is all. I'd say that lower quality games released over time might lead to less sales, but I doubt that would matter to anyone since it'd be so long in the future it probably wouldn't matter much.