There’s one hell of a rumour doing the rounds, and it feels as if it would be remiss of us to avoid it entirely, no matter how much it gives off the whiff of bullshit. The rumour in question is that Sony is in “advanced board level discussions” to acquire Take-Two Interactive, including subsidiary Rockstar. Yep, it sure does smell like a dairy farm on a sweaty August afternoon round here.
First of all then, the source, which is a report from MarketWatch, by way of Joel Kulina, head of technology and media training at Wedbush Securities. The full quote is as follows:
“Take-Two Interactive Software TTWO, +5.16% stock climbed 4.7% on rumors that Sony Corp. SNE, +0.90% “is in advanced board level discussions to acquire Take-Two Interactive in a mostly cash deal,” that would value the company at $130 share, according to Joel Kulina, head of technology and media trading at Wedbush Securities.”
This is speculative at best, and likely wholly unsubstantiated. However it’s happened, a rumour began circulating among investor circles which cause Take-Two’s stock to shoot up. As far as we can tell, there is no credibility to this rumour. That isn’t to rule out that it could happen, anything’s possible, but we’re so far into speculative territory that it’s difficult to draw conclusions.
If we were to take the raw numbers, Sony’s current market cap is around $58 billion. Take-Two Interactive is currently riding high at just under $11 billion. Should an offer be made to buy-out Take-Two, this would have to be considerably higher than their current value in order to gain approval from the board. Somewhere in the region of $15-16 billion, minimum, would probably be needed, giving investors 30-40% profits on their investments. Sony would have to spend 25-27% of its entire value, in cash, in order to push this deal through. That’s an insane proportion of Sony’s wealth and a very risky move indeed.
In addition to this, if Sony were to acquire Take-Two Interactive and then make its IPs exclusive to PlayStation, this wipes off the majority of its value in an instant. From an addressable market of hundreds and hundreds of millions of gamers, this would shrink to 80m PS4 owners. Sony just couldn’t viably buy Take-Two and not keep their games multiplatform; it would be an immense risk.
In terms of what a Take-Two acquisition would get the buyer, it looks something like this:
- Red Dead
- Grand Theft Auto
- Max Payne
- Midnight Club
- LA Noire
- NBA 2K
- MLB 2K
- WWE 2K
That’s some list. It’s pretty obvious why any games publisher would want to buy Take-Two Interactive, but wanting to and being able to are two very different things indeed.
For now, we’re going to have to chalk this one up as a load of guff. It’s fun to throw around, for sure, but it feels like a ludicrous proposition.