If Take-Two were for sale, who would want to buy them? Game developer Rockstar is Take-Two's most valuable
asset, but it'll be a while before the PlayStation 3 has the install base necessary to make the next iteration of their
Grand Theft Auto series the financial savior that the company so badly needs
right now. In a Reuters news story entitled "Analysts see no obvious suitors for Take-Two," Lisa
Baertlein examines the options:
- public companies aren't likely to bite, as Take-Two's vast infrastructure comes at a heavy cost that would weigh down a public company in ways that the acquiring company's shareholders are sure to protest; plus, most public companies probably couldn't take the heat that comes with the company's star franchise
- private companies could bear that heat, but are probably not too keen on paying for the larger company's heavy infrastructure just to acquire Rockstar, especially when Rockstar's value is largely locked up in the artists and programmers that created the GTA franchise and who could get spooked and leave in the turmoil that would follow any merger announcement
In a research report, Craig-Hallum Capital Group LLC analyst Mark Argento adds another angle to the picture: "Now is not the time to be establishing long-term positions in the video game stocks, especially in Take-Two in our opinion." Argento writes that the "GTA franchise remains valuable but may be starting to get a bit long in the tooth. While still a strong seller, we do not expect the franchise’s sales to be capable of offsetting the much larger infrastructure that Take-Two has significantly built up in front of the next cycle."
