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The clean-cut jock of the video game world wants to take a walk on the wild side.

Electronic Arts Inc., which has built an empire on family friendly sports and racing games, is making a bid for Take-Two Interactive Software Inc., a rival whose most popular game allows players to deal drugs, shoot police officers and murder prostitutes.

The world's largest independent game producer yesterday said it was launching the $2-billion (U.S.) hostile takeover after proposed "friendly negotiations" between the two companies failed to materialize.

The majority of EA's game are rated as suitable for children and young teenagers, according to the Entertainment Software Rating Board. However, Take-Two produces a number of games - including its top two titles, BioShock and Grand Theft Auto - which carry a "mature" rating denoting sexual or violent content and are designed for players over the age of 17.

The $26-a-share offer is a 64-per-cent premium over Take-Two's closing stock price of $15.83 on Feb. 15, the last trading day before Redwood City-based EA made its proposal. Take-Two shares closed at $17.36 Friday.

In a Feb. 19 letter addressed to Take-Two chief executive officer Strauss Zelnick and the board of directors, EA CEO John Riccitiello said he was disappointed the initial offer of $25 a share was rejected.

"We continue to believe that an acquisition of Take-Two by EA is in the best interests of your shareholders, employees and other constituents," Mr. Riccitiello said in the letter which was made public on EA's website yesterday.

EA's move could have implications for the Canadian game developing community, since both companies have development studios in Canada. The bulk of EA's sports video games are produced at the company's Vancouver studios while Take-Two has development operations in Vancouver and Toronto as well as a distribution facility in Mississauga.

The offer comes as Take-Two works to regroup following a rocky year. Shareholders threw out most of the company's top leadership last spring over poor results as well as accounting troubles and controversy surrounding violent and sexual content in the company's games.

Several former Take-Two executives, including chairman and CEO Ryan A. Brant, pleaded guilty in 2007 to falsifying business records in connection with a probe into backdated stock options.

Also last year, the British Board of Film Classification refused to certify Manhunt 2, a gory game that received an Adults-Only rating from the Entertainment Software Rating Board in the U.S.

Grand Theft Auto IV is expected to be Take-Two's biggest release of the coming year and is set to launch in April. With development on GTA IV nearly completed, Mr. Riccitiello said now is the ideal time to merge the two companies, while minimizing disruption within Take-Two.

Observers have speculated that Mr. Riccitiello was planning a big acquisition to beef up EA's offerings in the face of strong competition from Vivendi SA, after the French company announced a $9.9-billion offer to acquire a controlling stake in U.S. game maker Activision Inc. in November.

Both Take-Two as well as France's Ubisoft Entertainment SA were rumoured targets for EA in recent months.

Since taking over as CEO of the Redwood City, Calif., company last April, Mr. Riccitiello has been on a mission to solidify EA's position as a global powerhouse. The company produces some of the most popular franchises for PCs and consoles, including Madden NFL Football, Need for Speed and The Sims franchises, but is fighting to maintain its growth in an increasingly crowded market.

In October, Mr. Riccitiello spearheaded an $860-million deal to purchase two development studios from Elevation Partners; California-based Pandemic Studios and Edmonton's BioWare Corp.

TAKEOVERS VIDEO GAMES

Electronic Arts Inc.

Founded: 1982

Headquarters: Redwood City, Calif.

Studios: Five "hub studios" including Redwood Shores, Los Angeles, Vancouver, Orlando and Guildford, U.K.

Employees: 7,900

2007 Revenue: $3.1-billion

Top Games: Madden NFL Football, The Sims series, Need for Speed series, FIFA World Cup

Take-Two Interactive Software Inc.

Founded: 1993

Headquarters: New York City

Studios: San Diego, Vancouver, Toronto, Shanghai and Paris

Employees: 2,000

2007 Revenue: $981-million

Top Games: Grand Theft Auto series, Bioshock, Max Payne, Sid Meier's Civilization

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 4:00pm EDT.

SymbolName% changeLast
EA-Q
Electronic Arts Inc
-1.33%132.48
TTWO-Q
Take-Two Interactive
+0.49%144.62

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