For more than two years, investors, gamers and executives have wondered whether French media conglomerate Vivendi would launch a takeover bid for video game publisher Ubisoft. Now they've got an answer, at least for the short term.
Vivendi, which on Thursday will enter a time window compelling the company to either make a formal takeover offer or release some of the shares it owns, said it does not plan to attempt a takeover — though it appears the company is not ruling it out in the long term.
Vivendi "does not intend to file a public tender offer for Ubisoft shares nor to acquire control of the company," in the next six months, it said in a statement late last week.
On Thursday, the voting rights on some Ubisoft shares owned by Vivendi are scheduled to double, which would give it control of 30 percent or more of the video game company. That triggers the takeover offer window under French law. Vivendi did not specifically say it planned to sell shares, but did say it "will ensure that its interest in Ubisoft will not exceed the threshold of 30% through the doubling of its voting rights."
The company also said it will no longer lobby for a seat on the game publisher's board of directors "in view of the opposition expressed by Ubisoft's executive management."
Ubisoft, in a statement, acknowledged Vivendi's position, but remains wary — especially given the six-month window Vivendi set.
"Ubisoft takes note of Vivendi's statement. We will remain vigilant about their long-term intentions and will continue to pursue our strategy of growth and value creation in the interest of all our shareholders," it said.
That caution could be warranted. Vivendi, even if it sells shares to remain under the 30 percent voting rights threshold, could easily reverse course at some point in the future — and by skirting this takeover offer window, it keeps that option open for another time.
Vivendi sold its 85 percent stake in Activision Blizzard in July 2013 for more than $8 billion, saying at the time that it wanted to focus on the TV and movie side of its business. But the video game world has changed substantially since Vivendi bowed out.
Several publishers, including Ubisoft, have partnered to create theme parks or theme park attractions based on their IP. And there's increased interest from Hollywood in creating film and television shows spinning off of games. As a multimedia company, that could be of interest to Vivendi — especially since it eluded it with its last game company holding.
But Michael Pachter of Wedbush has little faith in Vivendi's ability to effectively run Ubisoft or any video game studio — even if it does ultimately take over the company (something that could be quite difficult, given Ubisoft's financial performance for the past two years).
"I think Vivendi has no idea what they're doing," said Pachter. "They had no idea what they were doing when they merged into Activision — and they did so because they had this valuable asset called Blizzard and had no idea how to manage it. ... The only reason they relinquished their Activision investment is Activision's management said, 'If you push us too hard, we'll just leave' and that's the same true statement at Ubisoft. If they try to take over the company, they won't have anyone left. ... I question their strategy in this."
Vivendi did not respond to a request for comment.
Even if Vivendi decides to walk away from its Ubisoft stake, it won't be a total loss for the company, however. The conglomerate says the current unrealized capital gain on its Ubisoft investment is more than 1 billion euros ($1.2 billion). And it maintained that given the size and growth trajectory of the video game industry, it plans to "continue to develop in this sector."