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EA and Take-Two Play Nice

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Flirting since last year, the makers of the video game industry's most popular franchises, "Madden NFL" and "Grand Theft Auto," moved closer to marriage Monday.

Electronic Arts said that, after several extensions, it would let its bid of $25.74 a share expire at 11:59 p.m. Monday and instead take a friendlier approach to acquiring Take-Two Interactive Software.

During the weekend, according to correspondence made public Monday, Take-Two executive chairman Strauss Zelnick negotiated with EA CEO John Riccitiello the rules for an equitable courtship.

Most significantly, Take-Two will include EA executives in a strategic review, whereby the former will share nonpublic portions of its three-year plan with the intent of convincing EA that it should increase its bid for the smaller rival.

In a further sign that an acquisition could be forthcoming, the Federal Trade Commission is expected to tacitly approve a merger of the two as early as Thursday.

It's not exactly a done deal, though, and Riccitiello made it clear he'd rather have closed the acquisition in time to benefit from Christmas.

"We no longer believe we can integrate Take-Two ahead of the important holiday season," Riccitiello wrote in a letter to Zelnick dated Monday.

EA first notified Take-Two of its interest in an acquisition last year, though Wall Street didn't learn of an offer until February, causing a 55% spike in Take-Two shares in a single day. If EA walks, investors fear Take-Two shares could head back into the teens. They closed 4.4% lower Monday to $23.75.

EA, the world's second-largest video game company by market cap behind Activision Blizzard, reported $3.7 billion in revenue in its most recent fiscal year, compared with Take-Two's $982 million.

Beyond "GTA," Take-Two also has the game "BioShock," which Universal is turning into a 2010 feature film with Gore Verbinski attached to direct.

Analysts were busy handicapping the latest moves in the ongoing saga, with some guessing that EA would sweeten its offer, but only to $27 a share. More bullish ones expected something closer to $30.