Publisher Take-Two has issued $200 million worth of senior convertible notes for purchase. Given that the company will likely receive a large influx of cash with the release of Grand Theft Auto V next year, Wedbush analyst Michael Pachter thinks the reason for the move is to acquire a company in the social or mobile space.
“We cannot envision any scenario where the company would run out of cash at any time in 2012,” reads Pachter’s investment note, “particularly taking into consideration that management has repeatedly stated it expects the company to earn ‘in excess of $2.00 per share’ in FY:13. A review of Take-Two’s line-up in 2012 reinforces our view that the company will generate even more cash in FY:13, and leads us to conclude that the proceeds can only be intended for acquisitions or strategic investments.”
“Take-Two is likely exploring an investment in the mobile or social games space,” claims Pachter. “We note that digitally delivered content accounted for 25 per cent of net revenue in Q2:12, and management consistently lists digital as a component of the company’s growth strategy.”
