Gaming giant Electronic Arts plans to let its offer for Take-Two Interactive expire as the companies move to closed-door discussions.
The company said on Monday that it will not be extending the offer, which is set to expire on 25 August at midnight US Eastern time.
EA had been offering $25.74 per share for the Grand Theft Auto publisher.
Instead, the two companies have agreed to discuss the deal in a meeting in which Take-Two's management will deliver a presentation to EA explaining their side of the matter.
Take-Two has said that such a meeting would have to be strictly confidential, in a stark contrast to the very public nature of the saga so far.
"Prior to the management presentation, we will only require EA to enter into a confidentiality agreement," Take-Two chairman Strauss Zelnick said in an open letter to EA chief executive John Riccitiello.
"I can assure you that this requirement is the same as or more favourable to EA than that which we have employed with all other participants in the process. "
In the meeting, Take-Two will disclose its future business plans and three-year release schedule, justifying a higher asking price for the company.
EA first issued its acquisition offer for Take-Two in February. Take-Two rejected the offer as too low, stating that it did not take into consideration profits expected from the then-unreleased Grand Theft Auto IV.
The company extended the deadline several times in a bid to appeal to Take-Two stockholders.
EA now worries that, even if a deal is reached, Take-Two may not be integrated in time for the lucrative holiday season.
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