Electronic Arts offers $2 billion for Take-Two (Reuters)

SAN FRANCISCO (Reuters) - U.S. video game publisher Electronic Arts Inc (ERTS.O) said on Sunday it wants to buy rival Take-Two Interactive Software Inc, best known for its "Grand Theft Auto" title, for about 2.0 billion in cash.

The 26-per-share offer by Electronic Arts, publisher of blockbuster games like "Madden" and "Need for Speed," represents a 50 percent premium to Take Twos (TTWO.O) Friday closing stock price of 17.36.

The offer follows months of speculation that Take-Two would be acquired by a major games publisher or media publisher.

It would be the most significant video game company deal since Activision Inc (ATVI.O) said in November it would merge with the games unit of Vivendi (VIV.PA) in an 18 billion agreement to challenge EAs long-standing dominance in the fast-growing industry.

A key question would be whether EA could retain the Rockstar studio behind the "Grand Theft Auto" franchise, said Michael Pachter, an analyst with Wedbush Morgan.

"Of the video game companies that could manage Take-Twos assets, EA could do it," Pachter said.

"But the Rockstar guys are not the classic kind of studio that fits into the EA fold," Pachter said. "It seems like an awful lot to pay for GTA with no guarantee that the team sticks around and is not a great cultural fit."

EA said it made the 26-per-share proposal after an earlier offer at 25 was rejected by Take-Two.

EA said that the rejection of the EA proposal by Take-Twos board prompted EA to release the letter and bring its proposal to the attention of all Take-Two shareholders.

A former EA executive who ran private equity firm Elevation Partners, Riccitiello returned as EAs CEO last April. He set about trying to revitalize the company by reorganizing it into four divisions, or labels, and in October engineered the purchase of two top independent game studios, Bioware and Pandemic, in a deal worth up to 860 million.

Shares of EA rose 79 cents, or 1.6 percent, to close at 49.74 on Nasdaq on Friday.

(Reporting by Duncan Martell; editing by Gunna Dickson)