Ubisoft Comments on Recent Buyout Reports

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Ubisoft Comments on Recent Buyout Reports

Key Takeaways

  • Ubisoft has acknowledged the recent report claiming it is considering going private with Tencent’s backing.
  • Nevertheless, the company said no decisions on the matter have yet been made.

As a long-time fan and shareholder of Ubisoft, I find myself both intrigued and apprehensive about the recent news of the company considering a private buyout. On one hand, the prospect of greater management flexibility and reduced financial reporting costs is enticing. However, as someone who has watched the stock price plummet over the past year, I can’t help but worry that going private might limit Ubisoft’s access to capital markets and hinder its growth potential further.

Ubisoft has admitted to contemplating a move to become a privately-held company, following a recent report. In a statement, a spokesperson for the firm emphasized their commitment to acting in the best interests of their shareholders.

A report from Bloomberg on October 4 suggested that Ubisoft might leave the stock market and become a private company, potentially with backing from Tencent. Currently, Tencent owns about 9.2% of Ubisoft’s voting rights and close to 13% of all its shares. These holdings are made through Tencent’s investment in Guillemot Brothers Limited, a firm managed by the founding family of Ubisoft.

Ubisoft Acknowledges Private Buyout Speculation, But Isn’t Committing to Anything Yet

Three days after the Bloomberg report was released, Ubisoft confirmed its validity by acknowledging it. In a statement given to VGC, a spokesperson for the company stated that they routinely evaluate all possible strategic moves in the best interest of their shareholders. However, Ubisoft has not yet made any significant changes in strategy. They only mentioned that they will disclose information about any potential shifts when necessary. The Bloomberg report sparked a 35% increase in Ubisoft’s stock price due to speculation about its potential private buyout plans. On Monday, October 7th, there was a slight drop in the stock’s value following this surge, but currently, Ubisoft is trading approximately 27% higher than it was before the report came out on Friday.

A few weeks following an activist investor’s call for Ubisoft to transition into a privately-held company, news surfaced online about the possibility of the firm being bought out by Tencent. However, there’s no evidence suggesting that this investor’s request sparked this potential move; it might have been already under consideration. When a public company’s stock is consistently falling, a private buyout becomes an attractive choice. This is particularly so because a lower share price makes the prospect of leaving the public market more cost-effective.

Ubisoft routinely assesses all potential long-term strategies with the aim of benefiting its shareholders. They’ll notify the public when necessary or relevant.

A Private Buyout Would Be a Double-Edged Sword for Ubisoft

Moving to a private status offers advantages like increased management flexibility and lowered financial reporting expenses, among others. However, this step restricts a company’s ability to tap into capital markets, potentially hampering its growth opportunities. It’s worth noting that the public market has shown skepticism towards Ubisoft’s growth potential, as demonstrated by its steadily falling stock value since early 2021, losing approximately 83% of its worth during this period.

Currently, Ubisoft is grappling with challenges rooted in multiple aspects, yet the main hurdle it faces now is a prolonged absence of a blockbuster game similar to Assassin’s Creed Valhalla, which was released in 2020. Afterward, Ubisoft launched several high-budget games that didn’t perform as well as anticipated at the box office; Star Wars Outlaws being the latest example of this trend.

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2024-10-07 18:23