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Electronic Arts Inc. (EA) Should Try to Buy Take-Two Interactive Software, Inc. (TTWO) Again

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Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is now just two months away from unleashing Grand Theft Auto V on hungry die-hard gamers.

Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

It’s going to be huge. The game play video released just two weeks ago has already been viewed nearly 18 million times. Video game sales have been slumping for four years, but watching Activision Blizzard, Inc. (NASDAQ:ATVI) set new sales records with every Call of Duty installment proves that there is still healthy interest in marquee releases.

Even in the circus that the industry has become, Grand Theft Auto V is definitely a tent pole. It’s been five years since Grand Theft Auto IV was released, and it went on to set initial sales records.

Does anyone else remember what happened two months before Grand Theft Auto IV was released? Well, Electronic Arts Inc. (NASDAQ:EA) made a failed attempt to acquire the smaller publisher.

Electronic Arts Inc. (NASDAQ:EA)’s offer to pay $26 a share in cash for Take-Two Interactive Software, Inc. (NASDAQ:TTWO) was shot down by the company’s board, followed by Take-Two Interactive Software, Inc. (NASDAQ:TTWO) shareholders nixing the proposal. Eyeing Take-Two Interactive Software, Inc. (NASDAQ:TTWO)’s stock today in the high teens, the initial reaction may be that Electronic Arts Inc. (NASDAQ:EA) dodged a bullet.

It didn’t, and it’s why Electronic Arts Inc. (NASDAQ:EA) may want to consider making another play for Take-Two Interactive Software, Inc. (NASDAQ:TTWO).

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) on Take-Two
It’s easy to argue that Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is kicking itself for passing on Electronic Arts Inc. (NASDAQ:EA)’s offer. The stock closed out last week 36% below Electronic Arts Inc. (NASDAQ:EA)’s original $26 offer. However, let’s take the offer off the table. Take-Two closed at $17.36 the day before the country’s second-largest video game developer went public with its plans to gobble it up. We’re really looking at just a 4% decline in that time.

Yes, a 4% slide in a little more than five years is pathetic. The mother of all tech rallies has taken place since then. Activision Blizzard, Inc. (NASDAQ:ATVI) — the country’s largest video game company — has seen its stock climb 21% higher in that time.

However, here’s the real kicker: EA shares have fallen 51% in that time!

It would be fair to say that EA wouldn’t have fallen so hard if it had succeeded in acquiring Take-Two. We probably wouldn’t have been waiting five years before full Grand Theft Auto installments.

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