Ubisoft entertain: Speculation on a takeover by the Guillemot family and Tencent catapult Ubisoft onto the stock market

(BFM Bourse) – According to Bloomberg, the Guillemot family is considering several options for the company, including a delisting, that is to say a buyout of the company, alongside Tencent. These press reports come as the company plunges on the stock market.

The return of speculation on Ubisoft stock? The title of the video game publisher jumped on the Paris Stock Exchange this Friday, taking off 32% around 4:30 p.m.

This movement, as violent as it is sudden, is linked to information from Bloomberg. Citing sources close to the matter, the agency reports that the Guillemot family and its ally, the Chinese juggernaut Tencent, are discussing their options to stabilize Ubisoft and increase its value, while its action has dropped around 30% over a month at closing on Thursday.

One option under discussion would be to simply delist the company, these sources told Bloomberg.

This last scenario would necessarily involve a public takeover offer to exit the minority shareholders. And would therefore be synonymous with a premium on the price of this offer (generally 40% to 50% compared to the last listed price or even more). Contacted by BFM Bourse, Ubisoft did not comment.

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Tencent, a powerful ally

Tencent has been the ally of the Guillemot family since an agreement dated September 2022 which brought the Chinese digital juggernaut (16 billion dollars in profits over its last financial year) into the family concert. The Guillemot family (15.4%) and Tencent (9.99%) currently own 25% of the capital, together, and 29.9% of the voting rights.

This press information comes as Ubisoft is experiencing a dark year on the stock market. At the end of September, the group issued a heavy profit warning due to disappointing game releases (“Star Wars Outlaws” and to a lesser extent “XDefiant”) and the postponement of its blockbuster “Assassin’s Creed Shadows”. So much so that its market capitalization now only weighs 1.75 billion euros.

The group had in recent years been the subject of regular speculation on possible takeover interests from competitors or private equity funds. But these speculations stopped abruptly in September 2022, due to the agreement between Tencent and the Guillemot family. Because investors judged that this alliance created a significant pushback against potential approaches.

Stifel considered, after the announcement of this agreement with Tencent, that the probability of an offer had been reduced. Invest Securities considered, for its part, that this alliance “preserved” the independence of the company.

This 2022 agreement provides that Tencent will not be able to increase its stake beyond 9.99% in Ubisoft for eight years (until 2030). But this capping clause contains an exception in the case of “filing by a third party of a public offer targeting Ubisoft Entertainment securities”.

Therefore, assuming that another video game player or a fund makes a hostile public offer, that is to say one not approved by the Ubisoft board of directors, Tencent, an ally of the Guillemots, could very well retaliate. “They could actually launch a counter-offer,” judges an analyst.

Julien Marion – ©2024 BFM Bourse