EA's Take-Two talent gamble - analysts mixed

Following yesterday's tender offer by Electronic Arts to buy any outstanding shares of common stock for USD 26 per share, and Take-Two's statement urging shareholders to take no notice, the spotlight has fallen on Take-Two's key development talent in the event that the takeover turns hostile.

But analysts are mixed on where Sid Meier, Ken Levine and the Houser brothers would stand in such a situation, and whether or not the prospect of a hostile takeover would make them more likely to move on.

"I don't think that having this be a hostile offer makes the development talent any more likely to leave," Doug Creutz of Cowen & Co told CNN Money. "Their loyalty is to their label, not the corporate umbrella.

"The problem is, EA is unable to talk to these guys. They can't do that now until they are in control of the company."

But Pacific Crest's Evan Wilson is less sure. "In my view, EA faces a substantial risk of losing development talent at Take-Two even if this deal was not hostile," he said.

"EA has changed how it treats that talent, but it still has a reputation for not treating the talent very well."

However, Wedbush Morgan's Michael Pachter believes those changes will have a positive effect on any potential outcome.

"I think EA is quite conscious about the potential for stifling creativity, so it will likely treat them with kid gloves," he said, adding that developers are more concerned by the titles they work on than by the corporate owner.

"You have to assume that the people who work at Take-Two on the creative side like making video games and like making money," he said. "They will look at things before they bail out - will they get a chance to work on anything else better and will they be paid as much? Probably not."

Take-Two's board yesterday committed to reaching a decision on the EA offer within ten days, and told shareholders that it would explain its reasoning then.

Earlier Take-Two executive chairman Strauss Zelnick had stated he wouldn't enter into any further negotiations until the day after the release of Grand Theft Auto IV in the US on April 29.