As recently reported, Activision and/or EA may be considering an acquisition of Red Dead Redemption developer Take-Two. In the wake of these rumors, Take-Two’s stock has reached a two year high, closing at $16 a share last night. The last time Take-Two stock was doing this well was way back in the fall of 2008.
The price rise lends credence to the acquisition rumors – acquiring companies typically overpay for the stock of the company they hope to acquire. In order to make money on such acquisitions, stock market watchers try to buy up the stock of companies they think will be acquired, knowing that they’ll be able to turn a profit when selling their shares to the acquiring company. The recent price hike in Take-Two may be the result of high demand for the stock in expectation of a looming acquisition.