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Report suggests GTA publisher a credible target

The latest rumour surrounding Take-Two is that Sumner Redstone's Viacom is interested in acquiring the Grand Theft Auto publisher.

In a Notable Calls report, three reasons are given for the rumour having at least a semblance of credibility.

Firstly, the author notes that Redstone is known to be interested in the videogame market, and that Take Two comes without licensed properties that quickly become baggage when rival media companies are involved.

The author also suggests shareholders are restless waiting for the company to recover, and that holders such as OppenheimerFunds, SAC Capital Management and Tudor Investment may be keen to sell for a good price.

The report also states that following the success of games such as BioShock and Carnival Games, and with a solid release date for Grand Theft Auto 4 on the horizon, the company is finally on a turnaround.

At the time of writing, Take-Two shares had peaked at USD 16.7.

Last year Viacom appointed former Take-Two managing director Arwed-Ralf Grenzbach as VP of videogames, music and special products for the Nickelodeon & Viacom Consumer Products division.

In December 2007, Microsoft and Viacom revealed a partnership to collaborate on a number of games, advertising, digital content distribution and event promotions.

Update

NEW YORK/SAN FRANCISCO, Feb 7 (Reuters) - Media conglomerate Viacom Inc (VIAb.N: Quote, Profile, Research) is not in talks to buy video game maker Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research), a source familiar with the matter said on Thursday, disputing reports of an offer.

Reports on the Web and a video games trade publication Web site said Viacom had offered $1.5 billion for the maker of the popular "Grand Theft Auto" games franchise, citing unnamed sources.

Shares of Take-Two rose as much as 12 percent on Thursday on the rumor.

Viacom declined to comment. A Take-Two representative said the company does not comment on rumors.

"This is very unlikely," Pacific Crest Securities analyst Evan Wilson said of the speculation. "Video games are a hot space and media companies are interested in participating in the growth, but for Viacom, they are pursuing a completely separate strategy."

Viacom was seen as an obvious target for speculation as the company and its founder have invested in the games sector.

Viacom, owner of MTV Networks and movie studio Paramount, last year earmarked $500 million to invest in video games. MTV's $175 million purchase of Harmonix, maker of music video game "Guitar Hero", has begun to pay off as Harmonix-developed "Rock Band" was a holiday shopping season hit.

But Viacom Chief Executive Philippe Dauman has said on several occasions recently that the company had no appetite for high-priced acquisitions, preferring smaller purchases or developing products and services internally.

"I don't think any of those media companies has the appetite to get into a new business," said Michael Pachter, an analyst with Wedbush Morgan.

Viacom founder and Executive Chairman Sumner Redstone separately holds a majority stake in game publisher Midway Games Inc (MWY.N: Quote, Profile, Research).

Take-Two shares were up 52 cents, or 3.3 percent, at $16.12 on the Nasdaq after briefing entering negative territory. (Additional reporting by Doris Frankel in Chicago; editing by Jeffrey Benkoe and Braden Reddall)