EA said Sunday that it has walked away from acquisition talks with Grand Theft Auto maker Take-Two.

But analyst Arvind Bhatia with Stern Agee believes EA is still very much interested in other acquisitions.

"It should be noted that [EA] currently owns approximately 19 percent of Ubisoft ... and we feel the likelihood of a full acquisition is now higher given the termination of discussions with "Take-Two," he said.

A possible Ubisoft acquisition by EA has been a subject of speculation for the past few years, ever since EA bought around a 20 percent share in Ubisoft in late 2004.

Bhatia also said the termination of Take-Two discussions won't have a negative impact on EA going forward.

Bhatia added, "We feel that acquisitions remain an important aspect of [EA's] growth strategy and the company’s balance sheet remains very strong with approximately $8.42 in cash per share and no debt."

EA withdrew its offer of $25.74 for each Take-Two share over the weekend. The all-cash deal would have amounted to around $2 billion.

The analyst said that even without the addition of Take-Two's library, EA has a strong lineup of games: "FIFA ‘09, new Sims titles, NHL ‘09, Warhammer Online: Age of Reckoning, Rockband 2. Dead Space, Mirror’s Edge and continued sell through of released titles such as Tiger Woods PGA Tour ‘09, NCAA Football ‘09, Madden NFL 09, NBA Live 2009 and Spore."

While Bhatia said EA's prospects remain strong, he was more critical of Take-Two's handling of the acquisition talks.

"...We feel Take-Two’s management has made a strategic mistake and disappointed its shareholders by not actively negotiating with EA earlier this year," he said.

He also said he believes Take-Two's earnings have "peaked," and they will decline over the "next few years." He feels that there is only a remote possibility that another suitor would match EA's offer.

But Doug Creutz with Cown and Company said in a separate investor note that's EA's decision to walk puts that publisher in a tough position as well.

"The decision to go it alone puts added pressure on EA to deliver improving fundamental performance.
We remain unconvinced that EA can reach its [fiscal year 2011] target of $1.5 billion in non-GAAP operating income," said Creutz.

He believes that an offer of $28-$30 per share would have closed the deal, but EA was unwilling to go that high.

Analyst Michael Pachter with Wedbush Morgan said he doubts any of Take-Two's purported "serious discussions" with "several interested parties" will lead to an acquisition of the company.

"Despite its repeated comments about other interested parties, it appears that none were serious enough to make a firm offer. Again, in our view, Take-Two’s fundamental valuation does not support a current offer at a price higher than EA was willing to pay," said Pachter.