Ubisoft comments on current buyout reports

Ubisoft has noted the recent report and claimed that it is considering going private. This came as part of a statement in which a company representative also assured shareholders that Ubisoft is looking out for their best interests.

The notion of the company’s possible exit from the stock market was initially sparked by a report from Bloomberg on October 4th that claimed Ubisoft was considering going private with the backing of Tencent. The Chinese conglomerate currently holds about 9.2% of Ubisoft’s voting rights and nearly 13% of all shares it owns through its investment in Guillemot Brothers Limited, a company controlled by the eponymous family that founded Ubisoft in 1986.

Ubisoft acknowledges private takeover speculation but is not committing to anything yet

Three days later, Ubisoft officially confirmed the Bloomberg report. In a statement provided to VGC, a company representative said the group “regularly reviews all strategic options in the interests of stakeholders.” Still, the developer-publisher isn’t ready to make any radical strategic changes just yet, only stating that it will “inform the market as appropriate” when appropriate. Ubisoft shares rose over 35% in response to Bloomberg’s initial report on possible private takeover plans. The rally saw a small downward correction on Monday, October 7, with Ubisoft currently trading around 27% above its pre-Friday reported price.

News that the company is considering a Tencent-backed takeover surfaced online just weeks after an activist investor publicly pushed for Ubisoft to be taken private. There is currently no evidence that this appeal has prompted the group to consider such a move, as it is plausible that it was already in the process of doing so. A private takeover is generally an obvious option for any public entity whose shares are steadily declining, not least because a low share price makes a possible exit from the public market more affordable.

A private buyout would be a double-edged sword for Ubisoft

Privatization also has the advantage of providing greater management flexibility and reducing financial reporting costs, among other advantages. However, such a move restricts a company’s access to the capital markets and thus inhibits its growth potential. Admittedly, the public market already doesn’t think too highly of Ubisoft’s growth prospects, as evidenced by the fact that the stock has been steadily declining since the start of 2021, losing over 83% of its value over that period.

While Ubisoft’s ongoing problems are due to a combination of factors, the biggest current problem is that it has gone years without a massive success of this kind Assassin’s Creed Valhalla. Since this open-world RPG launched in 2020, Ubisoft has released several games that had big budgets but failed to meet sales expectations, including the most recent Star Wars Outlaws.