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EA Extends Tender Offer for Take-Two, but Cuts Price

Electronic Arts said Friday it extended its tender offer for Take-Two Interactive Software by nearly one month at a lower price of $25.74 per share, drawing out a standoff between the two video game publishers.

The new price, which still values Take-Two at $2 billion, takes into account additional shares to be issued following stockholder approval of an incentive stock plan at its annual meeting Thursday.

The lower price makes good on Electronic Arts' warning that its per-share bid would fall by 26 cents if the incentive plan was passed.

"Their price is capped. They will not do a deal that is not accretive to fiscal 2010," said Kaufman Bros analyst Todd Mitchell, adding that EA could raise its bid by a dollar or two at most.

"If it doesn't get done it doesn't get done. They cannot overbid for this. EA has very strong revenue story but a weak earnings story," Mitchell said.

Take-Two has rejected EA's offer as too low, saying it undervalues the upcoming "Grand Theft Auto 4", which is widely expected to be the best-selling video game of the year.

EA , which had set the deadline to accept the tender offer for Friday, said it was extending that to May 16, more than two weeks after the launch "Grand Theft Auto 4".

EA wants "Grand Theft Auto" and other games like Take-Two's basketball and baseball titles to boost its own line-up and meet the threat posed by rival Activision, which is merging with the games unit of Vivendi to challenge EA for the title of biggest publisher.

EA said that through Thursday, some 6.4 million shares of Take-Two had been tendered and not withdrawn from the tender offer. That is about 8.3 percent of the 77 million shares Take-Two has outstanding.