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Take-Two has announced that it is issuing $200 million in convertible senior notes due 2016. Or to put that in plain English: it’s borrowing a massive stack of cash, for reasons currently unknown.
As reported by IndustryGamers, Take-Two has said that “net proceeds from the sale of the notes will be used for general corporate purposes, which may include acquisitions and other strategic investments.”
Wedbush Securities analyst Michael Pachter believes that the publisher may be looking to expand its presence in either mobile or social gaming.
“We think that an acquisition is imminent, and believe Take-Two is likely exploring an investment in the mobile or social games space,” said Pachter.
“We note that digitally delivered content accounted for 25 per cent of net revenue in Q2:12, and management consistently lists digital as a component of the company’s growth strategy.”
Senior convertible notes are essentially a way for a company to borrow cash based upon its future earnings. In this case, the notes will turn into a pre-set quantity of Take Two shares in the year 2016.
I know we all like to make fun of Pachter’s success rate with his predictions, but he may be right this time.
Mobile and social network games are a big source of cash for many publishers. Earlier this week Square Enix revealed that it has earned just shy of £37m from the sector over the past 18 months.
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