Earlier today, Electronic Arts went public with the news that it had offered to acquire Take-Two Interactive for nearly $2 billion--and that Take-Two management had turned the offer down. EA's offer broke down to $26 per share for Take-Two, a 64 percent premium over the stock's price of $15.83 at the time the offer was made.

　　Speaking with GameSpot today, Wedbush Morgan Securities analyst Michael Pachter questioned Take-Two's judgment in turning down the deal.

　　"The share price on Friday tells you that investors think the share price is $17. So an offer of $26 by definition is more than adequate," Pachter said. "And if the only argument management makes is that they have a turnaround plan and to give them time... It could take two or three years for them to get [the stock price] to that same $26. Who in their right mind thinks $26 three years from now is better than $26 today? This is a bird in the hand."

　　Despite the rebuff, Pachter predicted the acquisition will happen one way or the other. If the board of directors won't sell the company, he said EA can perform a hostile takeover, buying up enough shares on the open market to gain control of the company and show the current management team the door.

　　"By going public, EA is telling you, 'This deal is happening.' The only way you can credibly reject the deal is if there's a better one behind it," Pachter said. "I don't see how anyone can afford to pay this much or more for the stock."

　　More so than Take-Two's hit properties like Grand Theft Auto IV and BioShock, Pachter believe sports are the driving motivation behind the deal, and a main reason he doesn't expect other acquiring suitors to come calling. The economic advantages of eliminating 2K Sports--EA Sports' primary competitor in the market--are so great that they could pay for the $2 billion deal on their own, Pachter said.

　　"There's only one company that can make sense out of an acquisition of Take-Two, and that's EA," Pachter said. "For anyone else to buy Take-Two, they'd have to decide either to bloody themselves competing in sports against EA, or shut down the sports business and give up. Either way, there aren't many people who are going to pay a premium for the right to engage with EA or shut down that business."

　　One question mark about an acquisition of Take-Two is how much of the company can actually be transferred to EA. Pachter said key development personal like Firaxis' Sid Meier, 2K Boston's Ken Levine, and Rockstar's Sam and Dan Houser likely have change-of-control clauses in their contracts that would allow them to jump ship if ownership of the business changes hands.

　　"If any of the people under employment contracts with Take-Two have lawyers who are worth anything, there are change-of-control provisions," Pachter said. "They all should have that, but I don't think this deal is about retention of employees. With the [possible] exception of the Rockstar North guys, I think all of the [contracted] employees at Take-Two would actually welcome working for EA. I think Sid Meier would love to see Civilization have broader distribution and more focused marketing, and EA is really good at both."