OPINION: Why EAs purchase of Take Two is inevitable

In the wake of EA’s shock announcement of its move to acquire Rockstar owner Take Two, Wedbush Morgan Analyst Michael Pachter has stated that, in his opinion, the deal is now inevitable.

We think that EA has two choices – beat ‘em or join ‘em,” he said. They are attempting to offer a conciliatory gesture first, preferring to avoid the pain of a price war in sports without at least trying to acquire Take Two. Should shareholders reject EA’s offer, we expect the offer to be withdrawn, and expect to see EA compete aggressively and attempt to limit Take Two’s profit potential from its sports business.

Next, we think that EA will ultimately seek to disrupt continuity of the Grand Theft Auto franchise by attempting to engage the Housers and key Rockstar personnel upon the expiration of their contracts in February 2009.

Should EA not complete an acquisition in time to eliminate duplication and competition in its sports business, its next best alternative is to try to ‘hire’ key Rockstar personnel and engage them in creating an open world, mature-themed game to compete directly with Grand Theft Auto.”

To read Pachter’s report in full, click here.