It’s like the 1990’s again, with all of the big name merger and acquisition activity. We’ve read about Microsft and Yahoo in the last few weeks and now comes wind of a proposed $1.0 billion deal between video game titan Electronic Arts and Take-Two Interactive Software.

EA is known for its “Madden” and “Need for Speed” video games, while Take-Two is the developer behind the popular “Grand Theft Auto” video game.

If EA were to pull this deal off, it would surpass Activision as the largest video game publisher in the world. But it won’t be easy.

Activision has already slapped a ‘reject” stamp down on the offer, scoffing at the “inadequate” bid laid out by EA. At $26 per share for the bid, Activision probably has a point. No doubt EA thought the bid, larger than the $18 per share offer made by Activision for the French multimedia giant Vivendi.

And EA is trying to strike before the proverbial iron is hot, or at least before some like-minded competitors do. Wall Street has been buzzing with rumors about proposals for Take Two from Rupert Murdoch’s News Corp and Viacom, both of whom would love to get into the increasingly lucrative video game marketplace.

According to a dispatch today from Reuters, Take-Two Chairman Strauss Zelnick, said he hadn't ruled out a potential deal.

"We didn't slam the door, we just said look, the price is not right and the time is wrong," Zelnick told Reuters. But nowhere did Zelnick hint what an acceptable buyout price would be. Maybe he’s waiting for the April 29 release of “Grand Theft Auto IV”, viewed by gaming gurus as the biggest release of 2008.

Asked if Take-Two would enter into formal discussions with EA before the game's launch, Zelnick said: "We have to see what steps they take, and we have and will continue to operate in the best interest of shareholders."

"If something happens that creates a reason to do something different, its our job to do something different."

For its part, EA is open to discussion with Take Two, but won’t hesitate to get hostile if it has to.

EA Chief Financial Officer Warren Jenson, in an interview with the Associated Press, said "Our objective is to make this a friendly deal, but we have to keep all options open," Jenson said when asked it EA would consider a hostile bid for Take-Two.

Analysts say it’s a good deal for EA, at least, but only if it can snag Rockstar, the development studio behind the "Grand Theft Auto" franchise, as part of the deal. Says Michael Pachter, an analyst with Wedbush Morgan."Of the video game companies that could manage Take-Two's assets, EA could do it," Pachter told the AP.

"But the Rockstar guys are not the classic kind of studio that fits into the EA fold," Pachter said. "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."

Shares of EA rose 79 cents, or 1.6 percent, to close at $49.74 on Nasdaq on Friday, but fell by $2.48 at noon on Monday. Take Two is faring better, naturally after the kind of big bucks takeover offer that shareholders just love. It’s up 52% to $27 in mid-day Monday trading.

As video games being increasing more popular and commonplace for consumers of all ages, we will see more and more of this types of potential buyouts. This will encourage more small studios to open across the country making more employment opportunities for those hoping to enter the video game industry.

Andy Williams
GameJobHunter, Inc.

Get a video game job at www.GameJobHunter.com