Elevation Partners may be eyeing Take Two acquisition - report

The New York Post is reporting that Elevation Partners, the high-profile investment firm headed up by former EA boss John Riccitiello, is considering acquiring publisher Take Two Interactive in a deal worth up to $1 billion.

In a report published yesterday, the Post claims that Elevation has teamed up with Pequot Capital, a hedge fund which owns a significant chunk of stock in the embattled publisher - which is currently facing further lawsuits over last year's "Hot Coffee" affair, where a hidden "pornographic" game was found in Grand Theft Auto: San Andreas.

Elevation's involvement with the videogames industry is significant - the fund, which numbers celebrities such as U2 frontman Bono among its major investors, previously tried to buy British publisher Eidos, but its bid was beaten by one from SCi.

Late last year, however, Elevation got the entry into the industry it was seeking when it acquired leading North American developers Bioware and Pandemic, merging them into a single "super-developer" in a deal worth some $300 million.

Rumours over Elevation's intentions in the games industry have been rife since the firm first expressed an interest in buying Eidos. Industry gossip has attached the company to the current acquisition talks ongoing at the newly expanded SCi, as well as to a possible takeover of British studio Lionhead.

However, the Take Two acquisition would be a huge risk for Elevation - and analysts at Banc of America Securities believe that any takeover of Take Two is unlikely, despite reports to the contrary in the US press last week.

"We do not believe that TTWO is a good acquisition of LBO candidate," analysts at the firm stated bluntly in a research note issued last week. "We believe key employee retention, over-dependence on one title, high cost structure, cash burn, and mounting liabilities, are some important reasons why an acquisition of TTWO is highly unlikely."