Updated below: Electronic Arts (NSDQ: ERTS) has made a $2 billion cash bid for Take-Two Interactive, best known for “Grand Theft Auto”.
Offer details (full offer release here as well at the offer’s special website Eatake2.com):
—The $26-per-share offer by EA represents a premium of 64 percent over Take-Two’s closing stock price on Feb. 15th.
—A $25 per share deal was first outlined in a letter by EA CEO John Riccitiello to Strauss Zelnick, Executive Chairman of the board at Take-Two on Feb 19th.
—The board first rejected the offer and that led to EA making the offer public with $1 a share increase.
—“Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two’s shareholders.”
—From the company’s FAQs on the deal: “We’ve waited to ensure that our proposal did not disrupt development on GTA IV. The game is scheduled to launch in about two months, which means the core development should be essentially complete”.

EA will host a conference call on Monday, February 25,2008 at 8:00 am EST to discuss its proposal to acquire Take-Two Interactive…webcast here.

Take-Two has seen its fair share of troubles recently, including underperforming its rivals,  accounting troubles and controversy surrounding the violent content of “Grand Theft Auto” series. The offer follows months of speculation on the sale, including a rumors that Viacom (NYSE: VIA) had made a $1.5 billion offer for the company. IN fact as the letter from EA says, “Despite steps taken since March 2007, Take-Two remains dependent on a limited number of titles, and has limited capital resources. In addition, Take-Two faces ongoing financial, legal and operating issues and a very intense competitive environment. Given these factors, we believe it will be increasingly difficult for Take-Two to create sustainable shareholder value and that Take-Two remains exposed to considerable risk of value loss.”

For EA, which has publicly said it wants to move away from its heavy focus on big console games into adding on online interactive and casual games, this is the second big bid it has taken in the last six month, after buying VG Studios, the parent of video game producers BioWare and Pandemic Studios, for $860 million late last year.

Reuters:  A key question would be whether EA could retain the Rockstar studio behind the “Grand Theft Auto” franchise, said Michael Pachter, an analyst with Wedbush Morgan. “The Rockstar guys are not the classic kind of studio that fits into the EA fold…It seems like an awful lot to pay for ‘GTA’ with no guarantee that the team sticks around and is not a great cultural fit.”

Meanwhile, the big publishers consolidation continues: this follows Activision’s (NSDQ: ATVI) ongoing merger with the games division of Vivendi (EPA: VIV) for $18 billion.

Updated: As expected and done by Take-Two before, the company has rejected EA’s bid. It said in a statement that “EA’s proposal substantially undervalues Take-Two’s robust and enviable stable of game franchises, exceptional creative talent and strong consumer loyalty. We believe EA’s unsolicited offer is highly opportunistic and is attempting to take advantage of our upcoming release of Grand Theft Auto IV…Furthermore, the offer values the company at a significant discount to its public peers and does not compensate Take-Two for its intrinsic value and the substantial synergies that the proposed combination would create.”

It does however hint at the door being open: “While the Board believes that entering into discussions with EA at this time is not in the best interests of shareholders, we had offered to enter into a good-faith dialogue with EA to determine if our companies can reach common ground on the appropriate value of Take-Two as a first step to realizing a mutually beneficially transaction.”

It also said it would take up these discussions immediately after Grand Theft Auto IV is released. “We offered to initiate discussions with EA on April 30th, 2008…this offer demonstrated our commitment to pursuing all avenues to maximize stockholder value, while we believe that EA’s refusal to entertain this path is evidence of their desire to acquire Take-Two at a significant discount, whereas we believe this value rightly belongs to our stockholders.”

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