Rumors that Activision will buy out rival Take-Two don't add up, says a top industry analyst.
GameSpot reported over the weekend that there have been "some talks" between the two companies about a potential acquisition or merger. But Michael Pachter, an analyst with Wedbush Morgan Securities, doesn't think it's likely.
"Only a handful of Take-Two games fit the criteria Activision set out – megahits that come out every two years or so," he said. Though titles like Red Dead Redemption and L.A. Noire have the potential to sell 5 million units or more, Pachter said, there's no precedent for those games to come out on a recurring basis.
Late last week, Activision shut down its music business, laying off hundreds of employees and killing off Guitar Hero. The company also canceled True Crime: Hong Kong, a sandbox game that looked a lot like Grand Theft Auto.
"From the employees' perspective, Activision might appear to be a less desirable place to work, given the company's recent layoffs," Pachter said.
In 2008, Take-Two rejected a buyout offer of $26 per share from Electronic Arts. It wouldn't make much sense for Activision to match that offer and dish out $2.6 billion when Take-Two's current market value is $1.6 billion, Pachter said.
Activision and Take-Two did not immediately respond to Wired.com's requests for comment.
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