EA PULLS THE PLUG ON ITS $2B TAKE-TWO BID

It’s game over for the merger talks between Electronic Arts and Take-Two Interactive.

EA late yesterday dropped its $2 billion bid for the publisher of the wildly popular “Grand Theft Auto” franchise amid continued disagreement with Take-Two management over the value of its offer.

EA said in a statement while it “continues to have a high regard” for Take-Two, it decided to terminate takeover discussions after a review of a management presentation from its rival and other due diligence.

Take-Two, headed by Chairman Strauss Zelnick, held off EA’s advances for more than six months before agreeing to open up its books to its suitor at the end of August.

Zelnick steadfastly maintained that EA’s bid of $25.74 per share was too low.

EA CEO John Riccitiello was just as entrenched in his position. Though he extended the company’s tender offer for Take-Two five times, he held firm that its bid was fair.

Many investors and analysts saw $27.50 as a likely magic number that the two sides could agree on after the companies last month finally announced formal talks. However, sources close to the deal said yesterday both sides remained far apart on price.

One source close to the situation said the break off of talks reflected the diametrically opposed positions of the two sides throughout the process.

Timing was also believed to be a factor. Riccitiello originally waned to pick up distribution of mega-hit “Grand Theft Auto IV” in time for Christmas, with a particular eye on boosting international sales, but it became apparent that EA wouldn’t have time to fully integrate and market the game before the holidays.

In looking ahead yesterday, Riccitiello focused on the company’s organic growth opportunities.

He noted that the EA “is tracking toward a record breaking year” riding a mix of established sports franchises, anchored by “Madden NFL Football,” and new well-reviewed games like “Spore.”

As for Take-Two, sources said yesterday they expect the company’s stock to sharply decline today in response to the news.

Take-Two shares, up over 18 percent, or $3.44 cents year-to-date, ended last week up 24 cents at $21.89. Electronic Arts shares, which are off 23 percent, or $13.42, year-to-date, closed down 57 cents at $44.99 on Friday.