Take-Two buyout predicted

An analyst at The Motley Fool has predicted that struggling publisher Take-Two will be bought up in 2010. Basing his analysis on the fact that the company stock is now worth just 40 per cent of the proposed deal from EA they turned down in 2008. It's the time of the year for prediction, but there does seem to be some foundation in this one. Here is what the analyst wrote:

"It seems hard to believe that Take-Two turned down a $26-a-share buyout offer from Electronic Arts (Nasdaq: ERTS) less than two years ago. Then again, the publisher of the Grand Theft Auto video game series probably never fathomed that it would be targeting losses in the near term.

Take-Two is suffering through product delays and a moribund industry that has posted lower year-over-year sales in eight of the past nine months. That last point is critical in Take-Two's buyout thesis, though, since its larger competitors are also reeling at this point.

Larger developers can't rely on organic growth to put food on the table these days, and Take-Two is the industry's most compelling acquisition candidate. With several hot properties in its portfolio, including BioShock and Grand Theft Auto, executives have to be embarrassed to find their shares fetching just 40% of the buyout price the company turned down last spring."