Once people in a stock market see just how clear your vision is, then they start to imagine that you will pay whatever price is asked for the perfect deal you know you must have. That’s what seems to be happening as Vivendi tries to get its hands on Ubisoft to become a major force in European gaming.
The Vivendi plan is currently focused on Gameloft, for which it has now bid twice, originally at €6 and then this week it upped that offer to €7.20 valuing Gameloft at €610 million. This is a hostile takeover and the share price has now gone above this level to €7.40, suggesting that Gameloft investors believe the price will rise yet again. There has been no official reaction to this higher offer, but in rejecting the first offer the Board of Gameloft said it saw no synergies.
That’s clearly not the belief of Vivendi that sees that making films based on successful gaming franchises, looks like a very good business indeed. Ubisoft has its own Ubisoft Motion Pictures, set up in 2011, made to take advantage of this process.
Gameloft was founded by France’s Guillemot brothers, who also own Assassin’s Creed maker Ubisoft. Vivendi also said this week that it has increased its stake in Ubisoft from 14.9% to 15.7%.
Vivendi chairman Vincent Bollore wants both Gameloft and its related venture Ubisoft, simply because they are part of the entertainment market, and that’s its core business since it got out of operators.
Vivendi has sold off SFR, Maroc Telecom and allowed the management of Activision Blizzard to buy back Vivendi held shares, reducing the group to its Canal Plus and Universal Music brands, but with plenty of spare cash. It has also bought OTT news service Daily Motion.
Vivendi has since acquired a sizeable shareholding in Telecom Italia and a small holding in Telefonica and says it wants to launch a pan European OTT service to compete with Netflix, built out from Daily Motion.
We have never seen a hostile takeover increase the offer price more than once and be successful. Vivendi will either get Gameloft with this offer and that means the Guillemot brothers will have to speak to Vivendi management, or the price will continue to rise out of sight and it will drop the bid. That doesn’t mean that it won’t continue to build a stake in Ubisoft and come back to the table at a later date. The Ubisoft share price has not moved an inch and its market capitalization is closer to €3 billion. If Vivendi is serious about gaming it will need to keep buying Ubisoft shares and then make a bid for all of it.