Summary
Ubisofthas acknowledged the recent report claiming that it is considering taking itself private. It did so as part of a statement that also saw a company representative reassure shareholders thatUbisoftis looking for their best interests.
The notion of the company’s prospective exit from the stock market was originally raised by an October 4 report from Bloomberg, which claimed thatUbisoft is considering going private with Tencent’s backing. The Chinese conglomerate currently holds approximately 9.2% of Ubisoft’s voting rights and nearly 13% of all of its equities, which it owns through its investment in Guillemot Brothers Limited, a company controlled by the eponymous family that founded Ubisoft in 1986.
Ubisoft Acknowledges Private Buyout Speculation, But Isn’t Committing to Anything Yet
Ubisoft officially acknowledged the Bloomberg report three days later. In astatementprovided to VGC, a company representative said that the group “regularly reviews all its strategic options in the interest of stakeholders.” Nevertheless, the developer-publisher is not yet ready to commit any radical strategic shifts, having merely said that it “will inform the market if and when appropriate” about them.Ubisoft stock spiked over 35%in response to Bloomberg’s original report about its potential private buyout plans. The rally saw a small downward correction on Monday, October 7, with Ubisoft currently trading roughly 27% higher than its pre-Friday report price.
The news of the company considering a Tencent-backed buyout emerged online mere weeks after oneactivist investor publicly pushed for Ubisoft to go private. There are currently no indications that this appeal is what motivated the group to consider such a move, as it’s plausible that it was already in the process of doing so. A private buyout is generally an obvious option for any public entity whose stock has been steadily declining to consider, not least because a low equity price makes a prospective public market exit more affordable.
[Ubisoft] regularly reviews all its strategic options in the interest of stakeholders and will inform the market if and when appropriate.
A Private Buyout Would Be a Double-Edged Sword for Ubisoft
Going private also has the advantage of providing more management flexibility and reducing financial reporting costs, among other benefits. But such a move limits a company’s access to capital markets, thus inhibiting its growth potential. Granted, the public market already doesn’t think too highly of Ubisoft’s growth prospects, as evidenced by the fact that its stock has been on a steady decline since early 2021, losing over 83% of its value over this period.
WhileUbisoft’s ongoing strugglesstem from a combination of factors, its biggest current issue is that it went years without a massive hit in the vein ofAssassin’s Creed Valhalla. Since that open-world RPG hit the market in 2020, Ubisoft put out several games that had big budgets but failed to meet sales expectations, the most recent of which wasStar Wars Outlaws.
Ubisoft
Ubisoft is a well-known video game developer and publisher with a main headquarters in Saint-Mandé, France. Current CEO Yves Guillemot runs an array of teams responsible for some of the most iconic and well-known series in video games, with franchises like Assassin’s Creed, Farcry, The Crew, Just Dance, and more. Ubisoft also acts as a parent company for an array of other video game developers, including names like Massive Entertainment, Ubisoft Paris, Blue Mammoth Games, Red Storm Entertainment, and more.
