GTA V has yet to be announced. Many believe it will be some time this year (possibly even at E3), but more importantly, in the past couple years Take-Two has managed to grow its business so that it's not entirely dependent on the blockbuster franchise. Hits like BioShock, Red Dead Redemption and now L.A. Noire are proof positive of a growing portfolio - one that another company would probably love to acquire.
Sterne Agee analyst Arvind Bhatia points out that Take-Two has generated value for the company through its non-GTA efforts and that could make the publisher very attractive to a more prosperous suitor.
"Whether GTA V is released in late FY12 or a few months later, i.e., in early FY13, should not materially change the company’s intrinsic value. Besides, Take Two investors know that the risk of game delays and the accompanying earnings volatility is inherent to their investment in this stock. What should be more important is that with the strong launch of L.A. Noire last week, Take-Two has created yet another valuable franchise. As we have said, we think the company has now made a strong case for generating average annual EPS of $1.00 going forward ($1.35 ex the MLB contract that expires in 2012). With the GTA catalyst still ahead and the possibility of a takeout still a reasonable bet, we are reiterating our $19 price target which is based on our sum-of- the-parts valuation," commented Bhatia.
EA had been offering around $2 billion for Take-Two back in 2008, but Take-Two management felt it was being undervalued.
