The aggressive pursuit of Gameloft by Vivendi has virtually been finalized this week as the French mass media firm received shareholders’ backing for it to control a 61.7% stake in the games company and 55.6% of votes, according to a preliminary statement from the French stock market regulator.
The Vivendi gaming strategy is currently focused on Gameloft, but as it pushes to become a serious force in European gaming, it will begin to tighten its grip on Gameloft’s big brother, Ubisoft.
The hostile takeover, ongoing since October last year, saw Vivendi acquire stock at $8.91 per share valuing Gameloft at $780 million – but there are still uncertainties about exactly what Chairman and billionaire Vincent Bollore plans to do with Gameloft.
A possible and likely venture would be the development of a European-wide OTT service encompassing videos and games for mobiles and Smart TVs, built out from its French OTT service Daily Motion. As Vivendi shifts from a traditional broadcaster to a major OTT player it may even expand its OTT operations to include live sports.
But it certainly speaks volumes that Gameloft’s founders, the Guillemot brothers, who also own Assassin’s Creed maker Ubisoft, have expressed their concern that Vivendi doesn’t have the foggiest idea what to do with the business. The founders are so passionately against the way Vivendi does business that CEO and Chairman Michel Guillemot says he now plans to resign following this week’s news.
The Guillemot family will now be looking to desperately defend Ubisoft, which is a much larger gaming force than Gameloft, with a market cap of around $4.1 billion, but so far this has not stopped Vivendi from nibbling at its heels. It recently upped its stake from 14.9% to 15.7% – Vivendi looks to have its sights set on Ubisoft’s movie arm, Ubisoft Motion Pictures, as well as its gaming clout.
Since Vivendi began gradually increasing its shares in Gameloft and Ubisoft, both companies have publicly stated their intentions to remain independent. In April this year, Vivendi assured Ubisoft that it has no plans to launch a bid for a controlling stake in the next six months, to which Ubisoft said this was “confirmation of Vivendi’s habitual strategy of creeping control.”
The Guillemot family are right to be concerned considering Vivendi’s history of rapid and ruthless takeovers after initial investments – but if Vivendi is genuinely serious about gaming it will need to keep buying Ubisoft shares and then make a bid for all of it.
In the past 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 a quick glimpse at Vivendi’s latest financial statement reveals it has plenty of spare cash, some $5.4 billion of it. Revenues in the first quarter were down 1.4% from the same period last year to $2.8 billion, and it ended 2015 with total revenues of $12 billion.
Vivendi has been busy spending these cash reserves, and only recently acquired control of Mediaset premium in Italy for $912 million, which has the potential to create a major content owner and distributor in Europe’s Latin markets, with a customer base of over 18 million. It has also purchased more stakes in Telecom Italia bringing its total share to 24.9% – just below the 25% mark which would see another hostile takeover bid.
Earlier this year, Vivendi’s Canal Plus business was rumored to be ramping up its sports offering by acquiring Qatari competitor beIN Sports, but in February the two agreed to enter a content sharing deal. This is still awaiting approval from French antitrust authorities.
The French media company has also been looking to counter competition from Amazon Prime Instant Video, Netflix, Maxdome and other players in the German SVoD market, as last year it relaunched its underperforming OTT service Watchever.
Vivendi will reopen its bid for Gameloft from June 2nd to June 15th on the same terms at €8 per share.