Ubisoft Escapes Hostile Takeover Attempt by Vivendi, Enters Tencent Partnership

A few years back you may recall hearing about Vivendi attempting to buy enough shares in Ubisoft to essentially assume complete control over the well-known video game publishing house and group of development studios. In 2013 RealGamerNewZ reported about Vivendi refusing Activision Blizzard’s desires to separate from them with complaints to courts in USA that all of their profits from titles like Call of Duty and World of Warcraft didn’t even get put to good use but instead was needed for old Vivendi debts numbering above USD$ 17 billion the game company had nothing to do with.

Today, a large group of announcements was made by Ubisoft PR regarding the way this situation has changed recently and how it will play out across the next few years. Investors and gamers alike will be happy to hear that Vivendi appears to be backing off from their original ambitions and Ubisoft is regaining control of itself with new goals to avoid something like this happening again.

First and foremost, the approximate 28% of Ubisoft shares owned by Vivendi will be part of a shared buy-back by Ubisoft shareholders at a rate of EU€ 66 per share with Guillemot Brothers SE retaking their position of leadership among the board members of Ubisoft shareholders. Vivendi will no longer hold any shares by the end of this transaction and has agreed not to purchase any Ubisoft shares for the next 5 years.

Secondly, Tencent has entered into a partnership with Ubisoft. Tencent, for those who don’t know, are a massive mobile game publisher from China worth CN¥ 396 billion (USD$ 62.5 billion) as of 2016 who are often named as one of the most profitable video game companies in the world. In 2017 the company was stated to have the most revenue of any gaming company, and has the 5th most revenue of any internet-based company.

Subsidiaries of Tencent include Supercell (publisher of Clash of Clans and Clash Royale), Riot Games (creators of League of Legends), and recently Epic Games (Unreal Engine, Gears of War, Fortnite publishers and legends of the game industry). It would appear that Ubisoft has been taken under the massive wing of this Shenzhen born international conglomerate.

However, some who see this as Tencent owning Ubisoft would be incorrect as Ubisoft PR’s press release states clearly, “Tencent has committed to acquire 5,591,469 Ubisoft shares (5.0% of capital).” adding that, “Tencent has also undertaken not to transfer its shares nor to increase its shareownership and votings rights in Ubisoft.” with the deal mainly being said to focus on getting Ubisoft’s products into the newly emerging marketplace of modern gaming in China (which had its long term ban lifted in recent times).

Other points of interest include the Ontario Teachers’ Pension Plan becoming investors in Ubisoft purchasing EU€ 250 million worth of stake in the company (approximately 3.4%), and Ubisoft’s confirmation of their fiscal year 2017-18 and 2018-19 global profit targets. These goals are about adjusting expectations to be lower in revenue but higher in profit than previously forecasted.

Ubisoft fiscal year 2017-18 sales target is now of EU€ 1.64 billion euros (USD$ 1.93 billion), lowered by EU€ 6 billion Euros from original forecast of EU€ 1.70 billion. The operating profit margin target expected to be met during this period is now 16.5% (EU€ 270 million), up from the original expectation of 15.9%.

4TH QTR 2017 Ubisoft Products: Far Cry 5 (PC, PS4, Xbox), Assassin’s Creed Origins: Discovery Tour (PC, PS4, Xbox), AC: Creed Origins: The Hidden Ones DLC and Curse of the Pharaohs DLC (PC, PS4, Xbox), Rainbow Six Siege: Operation Chimera DLC (PC, PS4, Xbox), For Honor: Season 5: Age of Wolves (PC, PS4, Xbox), South Park: The Fractured But Whole: From Dusk Till Casa Bonita DLC (PC, PS4, Xbox).

Ubisoft fiscal year 2018-19 sales target is EU€ 2.10 billion with 23 million units expected to ship for their 4 AAA releases in that period including The Crew 2 and at least one unannounced franchise with 60% of those sales expected to be digital. Previously their fiscal target for the same period was forecasted based on 28 million units sold and 55% of those being digital, so some significant shifts in direction have occurred but a high profit margin is still being promised.

Finally, Ubisoft has also taken up a large investment with some of their assets which will allow the company to grow as times passes. Jean-Benoît Roquette of SVP Investor Relations for Ubisoft PR explains, “Ubisoft has successfully placed €500 million worth of five-year bonds maturing in January 2023 and carrying an annual coupon of 1.289%.”

Yves Guillemot, CEO and Co-Founder [of Ubisoft], said: “Today, Ubisoft is fully reaping the benefits of our long-term strategy and the successful transformation towards a more recurring and profitable business. Ubisoft is perfectly positioned to capture the numerous video game growth drivers in the coming years. We are focused more than ever on delivering on our strategic plan.”

Editor’s Note: RealGamerNewZ has moved web servers, some older posts can no longer be commented on and have been preserved without their images. Thank you for your understanding in this matter. This article was written by Jon Ireson on 20180321 and was last modified on 20180321 .