Games companies were mostly up for sale during 2004 and 2005, and although not too many consolidations actually went ahead, back then buying a little piece of each other seemed to be a good idea. It was like huddling together for warmth.
Well it has been a good idea for EA, which bought a 19.9% chunk in French gaming concern Ubisoft for $91 million, which although it is diluted back to under 15%, is now deemed to be worth $341 million on its books.
Ubisoft itself, at around the same time bought a 19% chunk of rival French gamer Gameloft, one of its European distributors, which was seen at the time as a way of staving off an outright hostile takeover from EA.
This week it sold those shares, some 13.4 million of them, for $112 million, to French bank Calyon which has 24 months in which it is supposed to slowly unload the stock back onto the stock market in France, compare the bought and sold price differences and record them, presumably as gains, on the Gameloft balance sheet.
In effect the merchant bank is underwriting the value of the Ubisoft held shares, using the balance sheet of Gameloft, which gets the cash to Ubisoft as quickly as possible, while staggering the market placement of the Gameloft shares.
Since 2005 Gameloft has shifted more heavily into the emerging mobile gaming market, which has made it far more of a success today than it was at the time of the share purchase. It is perhaps the success of Ubisoft on the back of a new generation of consoles, that is giving it the confidence to go it alone once more.
Ubisoft has just had great financials up 90% plus to €134 million ($185 million) for the past quarter, based on the success of games like Surf’s Up, Prince of Persia Classic, Oblivion for PS3 and Call of Juarez, console games. Ubisoft is perhaps best known for its Splinter Cell franchise of games.
Ubisoft CEO Yves Guillemot, said, ‘Following this sale Ubisoft and Gameloft will continue their productive collaboration at a purely operational level, particularly concerning the utilization of Ubisoft’s brands on mobile phones.’
Gameloft has 3,000 employees and expects revenues of $130 million this year and has been profitable since 2003.