Take-Two takeover a ‘reasonable bet’

Take-Two’s stable of popular intellectual property jumped by one recently, as L.A. Noire has proven critically successful, joining the Grand Theft Auto series, Red Dead Redemption, and others as hot properties under the label.

All of this means a Take-Two buyout is now a ‘reasonable bet’, or so says Sterne Agee analyst Arvind Bhatia.

“Take Two investors know that the risk of game delays and the accompanying earnings volatility is inherent to their investment in this stock,” he said. “What should be more important is that with the strong launch of LA Noire last week, Take-Two has created yet another valuable franchise.”

“We think the company has now made a strong case for generating average annual EPS of $1.00 going forward ($1.35 ex the MLB contract that expires in 2012). With the GTA catalyst still ahead and the possibility of a takeout still a reasonable bet, we are reiterating our $19 price target which is based on our sum-of- the-parts valuation.”

The likely candidate to purchase Take-Two was revealed to be megapublisher Activision, a company controlling gaming’s juggernaut: the Call of Duty franchise. What do you think  it would mean if Activision were to buy Take-Two?