Michael Pachter – What if Take-Two and EA did merge?
[My answer is] totally speculative. Had EA completed the deal, the TTWO shareholders at the time would have benefited, but other than Oppenheimer (who has been listed as a large shareholder the entire time), it’s hard to say that there are many of those other shareholders still around. I think that many of the shareholders who bought to take advantage of EA’s offer were sellers when the offer was withdrawn, so only a small number of current shareholders, including Oppenheimer, were actually involved in the stock back then.
EA would be a mess had it completed the deal. In addition to its own restructuring (which is just getting underway), the company would have been faced with re-signing the Housers and with cutting significant costs out of Take-Two in order to fully achieve synergies from the deal.
I don’t think a low cash balance [due to the T2 purchase] would be particularly relevant, since EA has a line of credit and is not burning significant cash, but it would have forced decisive action.
Notwithstanding, this is purely speculative. I think EA would be a stronger company if combined with Take-Two, as the latter company has several valuable franchises and a combination would have given EA a near monopoly in sports. Had they signed the Housers, EA would have been well-positioned to develop incremental new IP, and would have had one of the strongest franchises around in GTA.
But it didn’t happen, and doesn’t look like it will over the near term