Paying a Premium for Take-Two

Oh doctor! Take-Two (TTWO - commentary - Cramer's Take)! This has to be one of the most shorted names around, with about 40% of it short, but today it is Electronic Arts' (ERTS - commentary - Cramer's Take) prey, and there is no way you can get a do-over.

When I was short something like Take Two -- and believe me I was short tons of socks with long-standing accounting problems -- I always did it with puts because I always figured there was some dumb company out there that might be tempted to buy the darned thing.

I know it, because years and years ago I got hit with a buyout of Systemix, a biotech company that later on had to be written off lock, stock and barrel because it didn't have a useable product.

Take-Two always has had product, and while it wasn't something as hot as Guitar Hero, it was still hot enough for shelf space, and this acquisition is no doubt a shelf-space grab given how video games are now more of a pastime than movies, with a lot more box office.

Take-Two's been for sale ever since it dumped management and brought in caretakers. The only thing that I find amazing is that Electronics Arts is paying a big premium. I bet they could have gotten this for $20.

But that would have been a shrewder move, and I believe that by the nature of this acquisition Electronic Arts has revealed itself as none too smooth.

It seems like such an overpay that one wonders if it weren't a defensive move. But then again, if you are short, who cares, and if you are long, congratulations! You just got real lucky.

At the time of publication, Cramer had no positions in stocks mentioned.

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