EA made waves in October when the gaming giant purchased Pandemic and BioWare, and the company has pledged to release fewer sequels while expanding its new IP. While there hasn't been enough time to see if EA is sincere in that aim, the company remains acquisition-hungry, and has just made public its wish to purchase Take Two Interactive.

The move is bold: EA is willing to pay $26 per share for Take Two stock, a 63 percent premium over the stock's 30-day average selling price; the deal would consist of approximately $2 billion in cash. The offer was made on February 19 in a letter to Strauss Zelnick, executive chairman of the board of directors of Take Two, and, when taken public today, was promptly rejected. "We believe EA's unsolicited offer is highly opportunistic and is attempting to take advantage of our upcoming release of Grand Theft Auto IV, one of the most valuable and durable franchises in the industry," Take Two's own release states. The offer comes at "absolutely the wrong time," says Take Two; the company wants to wait until after the release of the surefire hit Grand Theft Auto 4 before taking a harder look at its options.

While the board may have rejected the offer, ignoring the implied threat will be difficult. "There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today," EA CEO John Riccitiello wrote to Take Two. EA is willing to pay this premium to get the deal closed now, in order to use its distribution and retail power to capitalize on the release of Grand Theft Auto 4.

The end of sports competition?

While everyone seems to be focusing on Grand Theft Auto 4, however, there is another important piece of this puzzle that cannot be ignored: Take Two, which owns 2K Sports, is the only other power player in sports gaming on the market. EA has just extended its exclusive deal with the NFL until 2013, and an acquisition of Take Two would put EA in control of the only strong competitor left in sports gaming. 2K Sports releases the popular NBA 2K, College Hoops, Major League Baseball, and NHL 2K series, among others.

This deal would make EA the only game in town for sports titles, with every pun very much intended. While Grand Theft Auto is certainly a huge series, this deal would give EA a complete monopoly of sports gaming, and it's impossible to put a value on cornering the sports market for the foreseeable future. It's unclear what would happen if Take Two came under the control of EA: the different 2K Sports and EA Sports could continue to operate independently, but it's also very possible that EA would kill one or more of the competing series, leading to only one choice for yearly titles in each sport. The lack of choice, combined with the an economic disincentive for EA to compete against itself, could lead to an overall weakening in quality in sports games.

While Take Two may not want to admit it, the company has very few weapons with which to fight this takeover. The offer is for cash, and EA is willing to pay more to have it happen as quickly as possible. The big price premium may be difficult for Take Two shareholders to turn down, especially since the company worked out a deal to borrow $140 million, if needed to stay in business. A cash infusion this immense, combined with the power of the EA brand, has to be tempting for the shareholders of the embattled Take Two, and if Take Two fights the takeover, it's likely we'll see a lawsuit from shareholders in favor of an EA acquisition.

EA may claim that it's not rattled by the power of the Activision/Vivendi merger, but this acquisition would give EA unprecedented power over sports gaming, and would allow the company to add BioShock, Bully, Midnight Club, and of course the Grand Theft Auto series to its already impressive stable of games.

While Take Two may wish to remain independent, EA seems resolute in its aim to acquire the company. If Take Two remains adamant in its refusal, EA could sweeten the offer a bit more, start a proxy fight like Microsoft is doing with Yahoo, or go for a full-on hostile takeover. The only question is how much worth EA places on the IP that Take Two holds, and how long the company can continue to say no to EA's advances.