Take-Two stock exceeds EA's bid before deadline

SAN FRANCISCO, May 16 (Reuters) - Investors appear to be betting that Electronic Arts Inc (ERTS.O: Quote, Profile, Research, Stock Buzz) will raise its $2 billion offer for rival video game maker Take-Two Interactive Software Inc (TTWO.O: Quote, Profile, Research, Stock Buzz) as the bid is set to expire at midnight on Friday.

Take-Two, which published last month's blockbuster "Grand Theft Auto 4," saw its stock close at $27.10 on Nasdaq, down 0.8 percent but still 5.2 percent above the $25.74 per share offered by Electronic Arts.

"The market's probably suggesting that EA should come up with a few more dollars and that may be a likely a scenario," said Colin Sebastian, an analyst with Lazard Capital Markets.

"It doesn't seem like shareholders would tender at $25.74 if the stock is trading at $27."

EA and Take-Two declined to comment.

In February, Take-Two rebuffed a direct takeover proposal from EA, leading the world's biggest game publisher to go directly to shareholders in a tender offer that expires late on Friday.

In April, EA extended the offer by a month after only about 8 percent of Take-Two shares were tendered. EA said the extension was due to a request by U.S. regulators for more information about the proposed transaction.

Take-Two management has said EA's offer undervalues the company, which also publishes popular franchises like "Midnight Club," "BioShock" and sports games that are EA's main competition in that category.

EA has said it could walk away from the deal, but analysts said its intentions may not be clear even after it reveals the results of the extended tender.

"It's like playing poker to some extent. It's negotiation and trying to call the other one's bluff," Sebastian said.

"They could say they're not extending the offer and appear to be walking away but actually still be interested and putting the ball back in Take-Two's court."

Electronic Arts fell $1.92, or 3.73 percent, to close at $49.60 on Nasdaq.

(Reporting by Scott Hillis, editing by Richard Chang)