Ubisoft Shareholders Discuss Potential Buyout While Maintaining Family Control

Ubisoft Entertainment SA, the renowned creator of hit franchises like Assassin's Creed, Far Cry, and Just Dance, may be undergoing significant changes in its ownership structure. Shareholders are in talks over the terms of a possible buyout, with one critical stipulation from the Guillemot family: they want to maintain control of the company.

Ubisoft in Buyout Talks: Will the Guillemot Family Retain Control?

For weeks, the Guillemot family, Ubisoft's founding shareholders, have been in negotiations with Tencent and other investors to explore the terms of a buyout that would allow management to take full control of the company. However, these talks are fraught with complexities, especially regarding how much power the Guillemot family will retain post-buyout.

The Guillemot Family's Key Position

The Guillemot family, which currently holds 15% of Ubisoft and around 20.5% of its net voting rights, is determined to maintain its leadership and influence within the company. Their key role in the company’s legacy and ongoing operations is a point they’re unwilling to budge on. This desire for continued control has shaped the ongoing discussions about the buyout.

The Role of Tencent: Major Stakeholder with Conditions

Tencent, a key investor with just under 10% of Ubisoft’s shares, is playing a pivotal role in these buyout talks. As China’s largest social network and gaming giant, Tencent’s involvement could dramatically change Ubisoft’s direction. While Tencent is interested in potentially increasing its stake, it has laid down some conditions.

Tencent's Requests: Influence Over Board Decisions

Tencent has expressed interest in gaining more influence within Ubisoft’s operations, particularly regarding future board decisions and how Ubisoft allocates its cash flow. However, the Guillemot family has yet to agree to these terms, creating a delicate negotiation process. Tencent has also voiced concerns about the potential for a hostile takeover of Ubisoft, prompting them to remain patient and cautious during this process.

Despite this, Tencent may choose not to increase its stake in Ubisoft, given that its current 9.2% holding is sufficient to maintain its influential role in Ubisoft's gaming business.

The Pressure from Minority Shareholders

Ubisoft’s recent performance, including the underperformance of titles such as Assassin’s Creed Shadows and the cancellation of XDefiant, has prompted some minority shareholders, like AJ Investments, to push for drastic measures. These investors are calling for either a take-private deal or a sale of Ubisoft to a strategic investor, a move driven by concerns over the company’s declining stock price.

In September, Ubisoft’s stock hit a decade-low following the announcement that its sales expectations had been missed. The company’s struggles, including the decision to close several production studios and scale back development in key markets, have only added fuel to the fire.

Ubisoft's Strategic Review

Ubisoft has not shied away from acknowledging its ongoing review of all strategic options, including the potential for a buyout or acquisition by a major investor. Despite the financial setbacks, the company’s management remains committed to acting in the best interests of its stakeholders.

Potential Outcome: What Will Happen Next?

As talks continue, the key question remains: will the Guillemot family be able to structure a buyout that secures their control over Ubisoft, or will the company succumb to a larger investor’s demands? For now, shares in Ubisoft have been on the rise, surging as much as 16% after news of the buyout talks broke. Investors are eager to see how these negotiations unfold and what impact they will have on the future of one of the world’s largest video game publishers.