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Electronic Arts $2 Billion Take-Two Bid Rejected

The video game publisher said EA’s cash bid of $26 a share undervalues the company and is timed at the April 29 launch of “Grand Theft Auto IV,” a highly anticipated video game whose shareholders believe will elevate the company’s value.

Take-Two’s board also blocked EA’s move on Monday. The protective measure temporarily awards 1,000 votes for each share currently owned. Those extra votes, however, would not transfer to a new owner such as EA, giving incumbent owners disproportionate voting power.

The measure is a risky route for Take-Two because regulators have tended to frown on efforts to alter shareholder voting power.

“These kinds of attempts to rearrange voting rights are highly vulnerable to legal challenges,” said John Coffee, a Columbia Law School professor.

EA called the board’s desired position “regrettable.”

“By advising its stockholders to reject the offer, Take-Two’s Board is exposing them to further delays which may reduce the value and the certainty of a potential transaction,” EA Games said in a brief statement.

“We’re willing to step away if this deal ends up not making sense for our shareholders. We don’t need this to happen in order to complete our long-term strategic goals,” company spokesman Jeff Brown said.

Some analysts say Take-Two is posturing to extract a higher price from EA.