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31 January 2006

there is no such thing as bad publicity

San Jose Mercury-News (California USA)
Monday 30 January 2006

Take-Two shares rebound
after report of buyout talks

NEW YORK (Dow Jones/AP) -- Take-Two Interactive Software Inc. shares rebounded Monday after a published report said the game publisher has been in talks with several buyout firms over the past week.

In afternoon trading, Take-Two shares climbed $1.11, or 7.6 percent, to $15.80 on the Nasdaq Stock Market.

The report comes after the stock fell 26 percent over four trading days last week.

Wednesday, New York-based Take-Two, the maker of the popular "Grand Theft Auto" series, filed a document with securities regulators that contained a resignation letter from board member Barbara Kaczynski, who said she had concerns about the company's management.

Friday, the Los Angeles city attorney filed a lawsuit over the inclusion of a sex scene in one of the company's games.

A phone call to the New York company wasn't immediately returned.

One Wall Street analyst, commenting on Saturday's New York Post report, which cited unnamed sources, wrote in a note to clients that the company could be a potential buyout target, most likely for a private buyout firm.

But other analysts said the prospects of the company being acquired are slim, given the lawsuit and the possibility of an investigation by the U.S. Securities and Exchange Commission, a concern also raised by Kaczynski.

Citigroup analyst Elizabeth Osur, who rates Take-Two stock at "neutral," wrote that the company has a huge amount of asset value that could be unleashed in a break-up. The analyst values the company's assets at closer to $25 to $30 a share.

But the company's risk profile makes a public buyer unlikely, she said.

"We think a public company buyer is unlikely given the bad press surrounding many of Take Two's franchises, but a private buyer could find the assets appealing," wrote Osur.

Osur pegs the value of Take-Two's Rockstar Games studio, which publishes "Grand Theft Auto," between $1.4 billion, or $19 a share, and $1.6 billion, or $23 a share, depending on how frequently management publishes titles based on the Grand Theft Auto franchise.

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