Updated from 2:21 p.m. EDT

Take-Two's ( TTWO) shareholders have defied the company's management in the past and they may do it again.

That's because rival Electronic Arts ( ERTS) has decided to go directly to Take-Two shareholders with a tender offer that is scheduled to expire at midnight on April 11, a day after Take-Two's annual meeting.

EA's hostile move to bypass management came after Take-Two's board of directors recommended early Thursday that shareholders take no action on the unsolicited $2-billion, or $26 a share, offer for Take-Two from EA.

Electronic Arts' Bid for TTWO Smells Like Desperation

Take-Two's move is consistent with its position in the last few weeks that EA's bid undervalues Take-Two.

Will Take-Two shareholders respond favorably and should they? Two Wall Street analysts believe EA will succeed in its bid.

Take-Two's shareholder base has changed in the last few weeks with some institutional funds reducing their stake in the company. And though the company is trying to get back on track, it continues to have many fundamental problems, including a lack of profitability and an inability to churn out a steady stream of new releases.

Meanwhile, without any other viable bidders, there's a stronger likelihood that EA, which has long coveted Take-Two, could walk away from the deal, analysts say.

Some of Take-Two's larger shareholders have already started bailing.

Earlier this week, filings Securities and Exchange Commission showed that two big institutional investors, Oppenheimer and Fidelity reduced their stake in Take-Two by more than half. Oppenheimer now holds about 11.5% in Take-Two, down from 23%, while Fidelity owns 2.75% compared with its earlier position of 14%.

"Public filings by major shareholders reflect that at least 23% of the shares have changed hands," says Michael Pachter, an analyst with Wedbush Morgan, which does not have an investment banking relationship with Take-Two or EA.

"The absence of any 5% filings during this period suggests to us that the buyers of these shares were risk arbitrageurs, and we think that their response to EA's offer will be less emotional and more pragmatic than the response from Take-Two's management," says Pachter in a note.

Shares of Take-Two added 49 cents, or 2%, to $25.40 in recent trading. EA shares were down 44 cents, or 0.9%, to $46.79

Take-Two shareholders have revolted in the past.

A year ago, a group of institutional shareholders consisting of Oppenheimer Funds, S.A.C. Capital Management, Tudor Investment and D.E. Shaw Valence Portfolios replaced former CEO Paul Eibeler and the entire slate of board of directors at Take-Two with the current management team. The shareholder group had a combined 46% stake in the company.

But with the recent sell off by big funds, the shareholder base has become more diverse, with the addition of smaller investors who are likely to accept the deal and make a quick profit from the difference between the current price and EA's tender offer.

"Take-Two shareholders are likely to vote for the deal," says Owen Mahoney, senior vice-president of corporate development at EA. "A lot of the shares are in the hands of arbitrageurs."

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