While Electronic Arts and hostile takeover target Take-Two Interactive remain locked in a stalemate, Forbes magazine has published a report suggesting Ubisoft might make things interesting by joining the party.
Neither Take-Two nor Electronic Arts have made moves of any significance recently, beyond EA's agreement to pause its takeover attempts pending the outcome of an FTC investigation. Take-Two chairman Strauss Zelnick has not changed his stance against the current EA offer, which is now set to expire on June 16, but throughout the process he has stated that "other parties" have expressed an interest in pursuing discussions of a partnership with Take-Two. During the second quarter earnings conference call on Thursday, Zelnick reiterated that he has "had and continues to have formal discussions with interested parties" regarding the future of Take-Two.
Ubisoft is cited by the article as a potential suitor for Take-Two based on both its record results in 2008, during which it more than doubled its 2007 net income, earning $173 million on sales of $1.5 billion, as well as recent indications from Laurent Detoc, the company's North American president, that Ubisoft is interested in moving away from a "pure games-based business" into brands that cross over into a variety of media. "Ubisoft has grown phenomenally over the past few years," said Signal Hill analyst Todd Greenwald. "But the only way for them to continue to grow is to enter categories that they aren't in."
The arrangement would be attractive to Take-Two developers because of Ubisoft's proven ability to handle original IPs like the hugely successful Grand Theft Auto and BioShock without making undue demands on the teams behind them. "Ubisoft has shown they do a good job of managing original intellectual property," said Cowen and Co. analyst Doug Creutz. "Culturally, Take-Two developers would not have a problem at Ubisoft because they allow a decent degree of creative freedom." Ubisoft is also said to be very interested in expanding into the sports videogame market, making the 2K Sports label very attractive.
The biggest potential snag in any such deal is financial; while Ubisoft is among the top five publishers in the world, it can't compete with EA's deep pockets. The report says the company has only $235.8 million on hand, while EA announced in May that it had secured financing worth $1 billion to help with the acquisition. While Ubisoft could not win any kind of bidding war, other alternatives such as a a stock deal are possible. The current value of EA's offer stands at $25.74 per share, for a total of roughly $2 billion.