Ubisoft evades hostile takeover by swapping Vivendi for Tencent

by Wade Massey March 23, 2018, 18:16
Ubisoft evades hostile takeover by swapping Vivendi for Tencent

As part of the deal with Ubisoft, Vivendi won't be permitted to make a buyout offer for Ubisoft over the next five years.

Ubisoft was able to do this buy offering to buy Vivendi's shares, but since it can't foot the entire bill, it instead did so with the help from Chinese mega-conglomerate Tencent, and the Ontario Teachers' Pension Plan. These investments are made at a price of €66 per share and do not grant any representation on Ubisoft's board of directors.

Prior to this agreement, Vivendi had been periodically picking up shares in Ubisoft with hopes of acquiring the company via hostile takeover. French law states that any company that holds a 30 percent stake in another conglomerate must attempt a hostile takeover.

Moving forward, The contract between Ubisoft and Tencent is also a beneficial to both parties, as Ubisoft will seek Tencent's help in proliferating some of its games into the Chinese gaming market.

Once the sale is completed, Vivendi will no longer be involved in Ubisoft.

For the last few years, Vivendi had been slowly increasing its stake in Ubisoft, though the company repeatedly stated it had no interest in owning a controlling stake. Tencent is perhaps best known in the United States for owning a majority stake in two huge gaming companies: Riot Games, the makers of League of Legends, and Epic Games, the makers of Unreal Engine 4 and game series like Fortnite.

CEO Yves Guillemot called it "a fight to preserve our independence" at one point. For a studio with several notable IPs like Assassin's Creed, The Division, and Rainbow Six, Tencent and Ubisoft certainly won't find a shortage of games to bring over.

According to the press release, Tencent is interested in the distribution rights for Ubisoft's properties in China, given that foreign companies need a Chinese distribution partner if they plan to do business in the mainland. "The investment from new long-term shareholders in Ubisoft demonstrates their trust in our future value creation potential". We doubt Ubisoft minds, especially since its deal with Tencent also comes with a partnership agreement that will widen its franchises' reach in China. This matches the partnership Tencent recently made with Paradox Interactive (EPA:ETA), owning 5% and helping to promote and push their titles in China, a largely untapped market for non-mobile video games.

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