The successful launch of L.A. Noire 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 Grand Theft Auto and has nothing of substantial value to offer in the so-called “non-GTA years.” But that’s a changing situation; the Take-Two stable remains small but impressive, with studios including Irrational, Firaxis, 2K Marin and of course the Rockstar behemoth producing franchises like BioShock, Civilization, L.A. Noire and Red Dead Redemption. 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 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.

Source: IndustryGamers

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