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Ubisoft (EPA:UBI) and Vivendi (EPA:VIV) Takeover Story Twists Again

Chris Wray
Posted Dec 11, 2016
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A little over two months ago we reported on the fact that Vivendi (EPA: VIV 17.42 -1.33%) pursued no position on the board of Ubisoft (EPA: UBI 30.25 -1.19%). During the same post I surmised that there was a longer game in play, one where Vivendi pushes to gain more shares in and more control over Ubisoft, potentially heading towards a takeover.

Of course this just my opinion, one that could likely be wrong. However, Vivendi have now upped their stake in Ubisoft to 25.15% of the shares, giving them 22.92% of the voting rights. In an announcement by Vivendi, they make a number of points based on the current acquisition:

  • Vivendi’s acquisitions have been financed using its disposable cash;
  • Vivendi is not acting together with any third party in connection with its investment in Ubisoft and has not entered into a temporary sale agreement concerning Ubisoft’s shares or voting rights;
  • Vivendi is considering continuing to acquire shares depending on market conditions;
  • Vivendi is not considering the launch of a public tender on Ubisoft nor acquiring the control of the company;
  • Vivendi is hoping to build a fruitful cooperation with Ubisoft;
  • Vivendi continues to seek a recomposition of the Ubisoft Board of Directors in order to, among other things, obtain Board representation consistent with its shareholder position;
  • Vivendi’s investment in Ubisoft’s business sector is part of a strategic vision of operational convergence between Vivendi’s content and platform and Ubisoft’s productions in the field of video games. S

Of course the points made indicate that Vivendi are currently not considering the acquisition of Ubisoft. However, this seems highly unlikely to me. First is the fact that they have openly indicated their interest in the gaming sector and how they could use it to complement their interests in the television, music and other sectors. This was most indicative with the hostile takeover of Gameloft earlier this year.

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Takeover Bids

What most indicates an interest in Ubisoft (EPA: UBI 30.25 -1.19%) is the direct indication that Vivendi (EPA: VIV 17.42 -1.33%) will continue to acquire shares in the company. Of course this will be based on the share price and other market conditions, but an acquisition, or offer, for Ubisoft will eventually be inevitable on the current trajectory. French law forces a mandatory offer when any one entity, or a group working in conjunction, reach the 30% threshold.

Should this threshold be met, and a takeover bid fail, then Vivendi would be forced into forfeiting any voting rights above the 30% threshold and also be unable to purchase any more shares.

As stated though, this is more of an opinion. The steps Vivendi have taken over the past number of months do indicate a strong interest in Ubisoft and the control of the company. Even should they not pass the 30% threshold, Vivendi will soon have a large block of votes for the next board meeting and will likely seek board representation then.

What of Ubisoft?

One question that does come to mind is the value of Ubisoft. If, indeed, Vivendi are being completely honest about not wanting to buy the company then their interest in purchasing even more shares would indicate that they see the company as undervalued. As a pure return on investment, it implies Videndi have confidence that Ubisoft will continue the recent trend of high sales and profit, moving away from the mixed past, as well as the ability to expand on the brands they have, such as with the upcoming release of the Assassin’s Creed film.

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If this isn’t the case, the Guillemot brothers have little they can do in response to the acquisition of more shares by Vivendi, beyond buying more of their own to shore up a defense. One of the few things they can do is to pursue further risks and build the company up and improve on the improved and impressive sales figures that we reported on earlier this year.

For now, the Guillemot’s will likely pursue their current path, while also shoring up the support of the Ubisoft staff, the gaming public and also keep attempting to grow Ubisoft with such as the purchase of Ketchapp earlier this year.

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