Ubisoft buy back shares to halt Vivendi’s hostile takeover

vivendi ubisoft

The Ubisoft versus Vivendi financial war has been surprisingly fascinating to watch, not least because it’s one of the few instances where the huge French publisher could be considered the underdog. Vivendi have been seemingly preparing for a takeover for some time, but recent developments make it look like Ubisoft might be able to stave of the potential acquisition.

Here’s the skinny, if this is the first you’re hearing about it: For several years, Vivendi, a gargantuan French media company and the former parent company of Activision, have been trying to swallow up Ubisoft. They’ve been doing this by buying up any shares that they can, which Ubisoft’s owners have not welcomed at all.

Ubisoft is currently controlled by the Guillemot family, who aren’t strangers to hostile takeovers from Vivendi. Last year, Gameloft, the mobile publisher founded by the family, was acquired by Vivendi. Having 30% of the voting rights would allow Vivendi to add Ubisoft to their list of companies, and after acquiring 25% of the company’s shares last year, they were getting close.

Since then, Vivendi’s influence has increased, and they now control almost 27% percent of shares and just over 25% of the voting rights. And an even bigger crisis seemed to be looming on the horizon. The French Florange Law grants double voting rights to long-term shareholders. Long-term shareholders like Vivendi. It’s not a law that’s got a lot of fans among France’s biggest companies. Essentially, this would push Vivendi’s voting rights past what it needs to start the takeover.

In the last couple of weeks, the Guillemots have made some big moves to secure their company. During the annual meeting last month, shareholders backed them, approving the appointment of new independent directors to the board. This change means that the independents have a majority. But thanks to Vivendi abstaining, another resolution was not passed. It would have allowed Ubisoft to issue more free shares to employees. A press release from Ubisoft at the time called it “essential”.

Share-based compensation is an essential tool for recruiting and retaining top talent in the videogame industry, and is a standard practice for competitive, modern, high-tech companies. Alternative solutions will be put in place to guarantee competitive compensation for talents.

This week, Ubisoft announced plans to repurchase shares using an unnamed investment services provider. From October 5, that’s yesterday, until December 29, Ubisoft will be allowed to buy back 4 million shares. Shareholders agreed to this during the last annual meeting.

These shares represent 10% of the publisher’s capital, and once bought, they’ll be retired. This means that nobody, not even Vivendi, will be able to gobble them up. Though it’s worth noting that, publically, Vivendi haven’t confirmed that they’re looking to acquire Ubisoft, despite their aggressive moves. They say they’re even considering selling their shares.

But why does one big company devouring another big company matter to us? Well, Vivendi isn’t exactly invested in games, argues Yves Guillemot, and instead just cares about the bottom line. Ubisoft also care about profit, obviously, but Guillemot points to games like Child of Light that he doesn’t believe could be made if Vivendi got control of the reins of power.

23 Comments

  1. TotallyUseless says:

    Good to hear, but among these fatass greedy corporations, who’s worse, Vivendi or Tencent?

    • gpown says:

      Judging by League of Legends and what I heard from colleagues at companies where Tencent has invested, they’re pretty hands-off. They know when they have something good on their hands and they don’t actively try to screw with it.

      • darkath says:

        On other hand, vivendi has been known in recent years to completely screw over companies it takes over by replacing established and experienced management by friends of vivendi brass or young wolves out of business schools as it did which french cable tv network Canal+, as well as making terrible business decision for political reason (because you see Vivendi’s boss is friend with former president Sarkozy and other of the same ilk)

      • hamburger_cheesedoodle says:

        Epic seems to be a counter-story though. Tencent effectively took control of Epic and within a year almost every big recognizable name had left the company, which doesn’t suggest good things for what was going on behind the scenes.

  2. soijohn says:

    As I’ve said previously on there, Ubi may not be the best videogame company out there, but some things are to be considered, notably that they are not as big pieces of shit as Vivendi and its boss Vincent Bolloré is (right wing 10th french fortune who is not at his first agressive buyout of a big culture development structure. (he achieved to do the same thing with a famous subversive TV channel and literally broke it and revamped it to nothingness))
    Plus, Ubisoft is one of the big french job creators in the video games sectors, they push it so that others can stay in the country and make videogames, they employ a lot of us (i’m an illustrator) and have a somewhat good employee/boss relationship (if not customer/dev). They would be a huge loss to us if Vivendi went and bought them.

  3. MacTheGeek says:

    What’s that word for what happens at sea, when people on one ship forcibly attack and take over another ship?

    Whatever it is, Yves Guillemot ought to announce that 93% of Vivendi fits the description.

  4. Antongranis says:

    Can someone explain why Ubi dosent simply refuse to sell if its so harmful to them? I know its something about publicly traded something, but cant say i understand it.

    • Phantom_Renegade says:

      They put out shares in return for money. Everyone who has shares partially owns Ubisoft. If a company wants to buy Ubisoft, the shareholders vote. The more shares you have, the more votes. Vivendi is trying to buy enough shares so that when the shareholders vote on a sale to Vivendi, they can vote yes and win.

      • Antongranis says:

        So ubi is sort of crowd funded then? And vivendi is buying shares individuals sell?

        • Rince says:

          Wall Street, doing crowdfunding before it was cool!

        • Fraser Brown says:

          It’s not crowdfunded – these are shareholders. When you crowdfund a game or any other project, you’re not getting a piece of the company, or any more control over it than what the creator gives you. That’s very different from buying shares where you’re investing money to make money and can, with enough shares, vote on the future of the company.

        • AngoraFish says:

          Yes, exactly. Shares are the original form of crowdfunding. Traditionally this crowdfunding was given in excange for fractions of ownership of a company (a SHARE of a company) and the cash gained from crowdfunders (shareholders) was used to further grow the business.

          The Kickstarter version of crowdfunding is a novel new approach whereby, instead of offering a share of the company itself, companies are now offering the rights to a future product instead.

  5. jezcentral says:

    Doesn’t this junking of 10% of the shares leave Vivendi (currently with 27%) with the 30% of the shares they need?

    • 7vincent7black7 says:

      I think it doesn’t remove the 10% from the pool, but allocates it ot the entity that buys it, or whatever, and then it cements it so that it can not be re-bought. So the 27% won’t jump to something ridiculous like 37% or something. I’m not an economist though, so idk.

    • AngoraFish says:

      My thoughts as well.

      Having done a bit of googling it appears that this story includes a huge chunk of copypasta, copypasta that RPS and a number of other game media sites have simply run with without really understanding the situation other than by reading a summary of a summary of a summary.

      In fact, as this article explains:

      Of course, if Ubisoft repurchases and cancels shares the reduction of total stock means that Vivendi’s percentage ownership will increase. This is however a moot point, because Vivendi’s ownership is set to automatically increase due to a double voting rights provision intended to encourage long-term shareholder loyalty. November will see Vivendi’s stake in Ubisoft automatically increase over the 30% threshold that would require them to make a takeover bid.

      With fewer shares on the market the price of those shares will increase, making it more difficult for Vivendi to stage a takeover of the French publisher. We’ve been hearing about the potential takeover for ages, and it seems we’ll find out what happens one way or the other next month.

      The RPS article is simply wrong in stating that “This means that nobody, not even Vivendi, will be able to gobble them up.” All the tactic means is that the share price will be pushed up a little and there is a little less liquidity in the market.

      • Fraser Brown says:

        Sorry to be a killjoy (I know it’s fun to catch us out) but the line you quote from my post is accurate. I was referring to the shares, not the company.

        And while you’ve done “a bit of googling”, I’ve been following this for well over a year and have a financial background (I wasn’t born writing about games). This isn’t a summary of a summary of a summary. It’s a quick primer on the current situation + new information based on the last annual meeting and the latest announcement.

        • AngoraFish says:

          Sorry to be a killjoy, but it’s your article that’s confusing.

          To give your paragraph meaning in the context of the rest of the piece it’s very easy to interpret the sentence you have written as referring to Ubisoft not gobbling Vivendi up. (Instead, what I see you now perhaps mean is that the bought back shares will simply be cancelled, as is normal practice).

          Vivendi’s attempts to defend against a potential Ubisoft takeover are the overwhelming tone of your article and it’s natural to interpret your second last paragraph in that context. Indeed, the line reads as your conclusion: big corporate battle, blah blah blah, takeover offer squashed by a Vivendi share buyback, the end.

          If we interpret your sentence as meaning that purchased shares will simply be cancelled, it’s not at all clear from what you have written how this is relevant to the rest of the piece at all, how a buyback might prevent a takeover offer, and why you would chose to end the piece with that information. As op notes, a share buyback normally has the effect of intensifying Ubisoft’s shareholding (and getting it over the 30% threshold) not stifling a takeover bid in any practical way.

          In fact, a share buyback doesn’t stop Uibisoft “gobbling up” shares at all, or at least, no more than me “gobbling up” a few Vivendi shares for myself since Vivendi, Ubisoft and I all have to compete to purchase those shares on the open market.

          In fact, in some instances a share buyback might make a takeover cheaper and easier as it partially decapitalises the company, reducing the value of the company overall as it will have less chah in the bank.

        • AngoraFish says:

          And now I’m scanning back through old articles, I note that the heading of the entire article says the same incorrect thing: “Ubisoft buy back shares to halt Vivendi’s hostile takeover”. Actually, as discussed above, buying back shares will do nothing to halt a hostile takeover.

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            kfix says:

            Mate, you should probably give up while you are behind. Not only is it clear that the “them” in that sentence refers to the “they” in the previous sentence, but the article you quoted directly contradicts you about the effect of the buyback.

            “With fewer shares on the market the price of those shares will increase, making it more difficult for Vivendi to stage a takeover of the French publisher.”

            Quite ironic, given the accusation you made.

  6. Darth Gangrel says:

    I’m not especially fond of Ubisoft, don’t like their games or their “one model (AC) fits all”-mentality and like Uplay even less, but they’re not the worst and it would be sad if Vivendi got control over them.

  7. Sin Vega says:

    Ubi have their faults, but they do make an effort now and then, and their game are consistently good if often safe and samey. In any case, more devs in fewer hands is nearly always a Bad Thing for games. I hope Ubi can see this one off.

    • identiti_crisis says:

      This. It effectively kills creative diversity.

      The way entities swell and subsume most others, primarily for ROI and not for the end-product, is a real killer for us as “consumers”. Of course, “big budget” games wouldn’t exist without it, but there’s a balance to be had.

      Naturally, it’s up to us to punish this behaviour so that investment trends shift to sustain diversity in our marketplace. And so begins the cycle anew…

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