Electronic Arts Thursday launched a tender offer for rival video game maker Take-Two Interactive Software at $26 a share, indicating its $2 billion bid is turning hostile.
Take-Two, publisher of the popular "Grand Theft Auto" video games, last month rejected EA's unsolicited all-cash offer at the same price.
The bid represents a 64 percent premium over Take-Two's closing stock price on Feb. 15, the last trading day before EA sent the proposal to the company.
"We believe Take-Two investors will see our tender offer as the best way to maximize the value of their investment in Take-Two," EA Chief Executive John Riccitiello said in a statement.
Take-Two Chairman Strauss Zelnick has said the bid was "the wrong price and the wrong time," arguing that EA was trying to buy his company on the cheap just before the April 29 launch of "Grand Theft Auto 4."
Take-Two this week forecast quarterly earnings above Wall Street estimates, saying orders for "Grand Theft Auto 4" were better than expected.
Earlier this week, Take-Two's two biggest shareholders disclosed that they had drastically cut their stakes, potentially undermining management's stance that the $1.9 billion buyout offer was too low.
U.S. mutual fund company Oppenheimer Funds, Take-Two's biggest shareholder, halved its holdings to 8.8 million shares, reducing its stake to 11.5 percent from 23 percent, according to U.S. regulatory filings.
FMR, the parent company for the Fidelity mutual funds and the second-largest owner of Take-Two shares, reported that it had slashed its stake to 2.75 percent from 14.7 percent.
But Zelnick said earlier in the week that the big stock sales did not cause executives to reconsider their rejection of EA's offer.
"It certainly doesn't put any pressure on us," Zelnick said. "Who owns your shares isn't really the issue; after all, we're here for all the shareholders."
Take-Two shares closed up 1 percent at $24.91 on Wednesday, but have fallen from a high of $27.61 set on Feb. 28, shortly after EA announced its offer.
EA's tender offer will expire at midnight April 11, but could be extended.
Take-Two's annual meeting is scheduled for April 10.
Morgan Stanley is dealer manager for the tender offer, for which Georgeson is information agent.