Electronic Arts Inc. decided not to go forward with its hostile bid for Take-Two Interactive Software Inc., but it may very well collaborate with its smaller rival. EA said it will entertain a confidential financial presentation by Take-Two.

Officials of Take-Two said on Monday that they agreed to sign a confidentiality agreement with EA soon and start talks regarding possible "strategic alternatives." After six months of negotiations during which the two companies did not managed to agree on a price although Electronic Arts delayed its offers on five occasions, EA said that it won’t extend the deadline set for Monday night.

The last sum of EA’s tender offer for Take-Two was of $2 billion, but it will expire tonight as the company decided to re-evaluate its offer.

As a consequence, EA shares plunged early in the morning. Meanwhile, Take-Two stock fell about 5 per cent. The majority of Take-Two’s shareholders were in favor of EA’s offer to take over the company for $25.74 a share in cash, ignoring the board’s belief that the offer rated the company too low.

After announcing its decision to let its latest take-over bid expire, Electronic Arts said that if it would buy Take-Two now, it wouldn’t have enough time to complete the merger process until the holyday season, the period during which the companies make their most important earnings.

"We no longer believe we can integrate Take-Two ahead of the important holiday season. Accordingly, we require due diligence to support a transaction," said EA’s CEO John Riccitiello.

Well, EA wants to review its assumptions in order to probably pay less, while Take-Two says its worth more. Take-Two CEO Ben Feder said the company will continue its policy of considering “all alternatives that will maximize value to our stockholders."

“The important thing is that they are talking," said Wedbush Morgan analyst Michael Pachter, according to The Associated Press news agency.

Besides the "Grand Theft Auto" franchise, , Take-Two’s most important earnings source, the elements which drive EA in its efforts to acquire its smaller rival include the company’s sports business and titles such as "BioShock," which is currently adapted for the movie screen.

During the latest fiscal year, Take-Two Interactive Software Inc. recorded sales of $982 million, while Electronic Arts posted sales earnings of $3.67 billion.