Ubisoft Shares Surge on Acquisition Talks News
Shares of Ubisoft Entertainment SA (EPA:UBIP) rose by 16% on Friday after Reuters reported that shareholders, including the founding Guillemot family, were in talks regarding a potential acquisition of the leading French video game developer. The Guillemot family, the largest shareholder group, is exploring ways to structure a buyout that would not dilute their control over the company, which is known for popular games like Assassin’s Creed and Far Cry.
The family is in discussions with large shareholders and Tencent Holdings Ltd (HKG:0700), China's largest social network and gaming company, to secure financing for a management-led buyout. Despite these talks, the Guillemot family expressed a strong desire to maintain their current level of control over Ubisoft, which also produces the Just Dance and Tom Clancy video game series.
Tencent, which holds the second-largest stake in Ubisoft, is considering participating in the acquisition and potentially increasing its stake. The Chinese giant has requested greater influence over board decisions, including cash flow, to fund the deal. However, no agreement has been reached on this matter with the Guillemot family.
Ongoing discussions are also part of Tencent's strategy to prevent a potential hostile takeover of Ubisoft by other parties. While Tencent is evaluating its options, it may prefer not to increase its stake in Ubisoft, believing that its current direct ownership of nearly 10% is sufficient for its gaming collaboration with the company.
A Ubisoft spokesperson reiterated the company's commitment to acting in the best interests of all stakeholders and stated that they are evaluating all strategic options. This statement follows Ubisoft's admission in October that it routinely assesses strategic alternatives, but the company declined to comment on specific reports of acquisition interest.
The potential acquisition talks come at a time when minority shareholders, including AJ Investments, are pressuring Ubisoft for a special takeover or sale to a strategic investor due to the company's declining stock price. Ubisoft's shares fell to a ten-year low in September after decreased sales forecasts and the postponement of the "Assassin’s Creed Shadows" game.
Recently, Ubisoft announced that it had canceled the XDefiant game, leading to the closure of its production studios in San Francisco and Osaka, as well as downsizing its operations in Sydney.
The Guillemot family currently owns 15% of Ubisoft, while Tencent's stake is just under 10%. According to the company's most recent annual report, as of the end of April, the family was reported to hold approximately 20.5% of Ubisoft's net voting rights, while Tencent held 9.2%.