Pachter: EA needs loan to have enough money for Take-Two take over

Eyebrows were raised when word of Electronic Arts filing for a loan to support its campaign to acquire Take-Two Interactive broke out. However, if there’s one guy who wasn’t surprised, it’s the good ‘ol Michael Pachter who claims he knows exactly why such loan was necessary. Find what he has to say at the full article.

Following recent development in Electronic Arts‘ camp as it secured a US$ 1 billion loan to fund its take over threat over Take-Two Interactive, Wedbush Morgan’s Michael Pachter took a shot at explaining EA’s move. According to the prominent video game industry analyst, “It is something that should be expected.”
 
EA only has around US$ 1.7 billion in available cash after spending a significant amount of money on the acquisition of BioWare and Pandemic Studios, said Pachter. Since the company offered Take-Two US$ 2.1 billion, it apparently needs more cash. Pachter pointed out that working capital would cost around US$ 400, so there’s the need for US$ 800 million.

“The extra $200 million is just a cushion,” Pachter added. “Although I suppose it could be construed as how much higher theyÂ’re willing to go [for Take-Two].”

Meanwhile, Pachter admitted he expected EA to file for the loan back in March 13 when the bid for the BioShock and Grand Theft Auto series owner went hostile. He commented, “I have no experience in credit markets like weÂ’re experiencing now, so maybe itÂ’s normal to take 8 weeks to get something like this done.” Otherwise, the delay could’ve been in line with the appointment of new EA Chief Finance Officer Eric Brown.