Ubisoft’s Yves Guillemot might feel ready to fight, but the threat from Vivendi is stronger than ever as the media conglomerate is set to receive double voting rights in November. This would result in the Vivendi breaching 30 percent voting rights, prompting a hostile takeover that could end the Guillemot’s control over the company.
French law caps voting rights at 30 percent for any one entity, forcing a hostile takeover attempt once that amount is breached which could end in one of two scenarios; either Vivendi wrestles control of the company or it will be forced to sell shares off to fall below the 30 percent barrier once again.
Currently, 26.6 per cent of Ubisoft’s share capital is owned by Vivendi, with the media empire holding 25.2 per cent of its voting rights according to the Financial Times. Come November 20th, Vivendi will have had these shares for two years, resulting in France’s Florange Law kicking in. This law grants double voting rights and would push past the threshold, forcing Vivendi to move on Ubisoft.
Ubisoft shareholders have backed the Guillemot family at today’s annual meeting for the company. This has resulted in the approval of independent directors for Ubisoft’s board being approved as well as the extraordinary resolutions that require more than two-thirds of the overall vote and, given the board of directors’ consent, the possibility of employees participating in capital increases.
“We are delighted with the massive support of shareholders, which strengthens our determination and ability to defend the interests of all shareholders, and to pursue our strategy of growth and value creation,” Guillemot said. “Ubisoft consolidates its position in the industry among the world’s leading video game and entertainment companies.”
Extraordinary resolution 31 in which free shares are granted to employees was rejected due to not reaching the required two-thirds majority vote. When pairing this with the sky rocketing price of company shares due to Vivendi’s grasp of the majority, which are now worth 74 percent more than last year, means that Ubisoft’s current hold is weakened.
“Share-based compensation is an essential tool for recruiting and retaining top talent in the video game industry, and is a standard practice for competitive, modern, high-tech companies,” states Ubisoft. “Alternative solutions will be put in place to guarantee competitive compensation for talents.”
If you’re wondering what might be so bad about a Vivendi-owned Ubisoft, Guillemot spells it out, saying that “It’s difficult for us to be part of a conglomerate because speed and agility will suffer. When you don’t have agility in our industry you’re dead. The question is whether Vivendi will then make a tender offer or not. We feel it wouldn’t be in the best interests of their shareholders because buying a company in our industry aggressively is actually very risky.”
Vivendi has actually continued to abstain from any votes during the shareholder’s meetings last year and this year, keeping to itself about what it plans to do. Analysts conclude that the best course of action for shareholders of both Ubisoft and Vivendi would be the latter selling off its shares of the video game company and reinvesting it in its own ventures rather than pushing for an expensive hostile takeover that would upset the synergies as they currently are.
KitGuru Says: I am not sure if Ubisoft’s current success can be fully attributed to its independence, but it’s obvious that the Guillemot family are doing something right in steering the company. I am more interested to see where they take it than if Ubisoft were to be absorbed into a larger conglomerate and get suffocated.