Let the games begin. Take-Two (NSDQ: TTWO) Interactive’s shares jumped up by 12 percent today, buoyed by the news that activist investor Carl Icahn had upped his stake in the company on the belief that its stock was “undervalued.” The spike comes just two weeks after Take-Two’s share price dropped by 10 percent, when the company lowered guidance, and said it would likely post a full-year loss for 2010, too.
Icahn has been an investor in Take-Two since 2007, and as Wedbush Morgan analyst Michael Pachter notes, he’s bought low and sold high twice before in the company’s history: Once in 2007, after shareholders ousted the entire board and then CEO Paul Eibeler, and then later that year, when the company said the GTA: IV launch would be delayed. Both times, he wound up making a profit — leading to speculation on the Street that Take-Two’s shares will definitely rise again — though this time, because of a potential sale.
But who would buy? Take-Two rejected EA’s advances last year, there’s no sign that Activision (NSDQ: ATVI) is interested, and those are the only other two game publishers big enough to acquire it. Disney (NYSE: DIS) has a robust games division, but Take-Two’s game line-up is the epitome of anti family-friendly … Warner Bros. (NYSE: TWX) just bought the remnants of Midway Games, and could be wary of another big acquisition in the same space.
Nevertheless, there’s non-stop chatter about a sale. Per Pachter’s research note: “We believe that Mr. Icahn intends to force the company to consider a sale, and note that he has a history with [Strauss Zelnick, Take-Two’s CEO]. When Mr. Icahn became Blockbuster