MAY 31, 2016 • Vivendi SA now controls more than 50% of mobile game publisher Gameloft SE based on results announced by French regulator AMF that 28.2 million Gameloft shares were tendered to Vivendi’s €8 per share tender offer – equaling 61.7% of share capital and 55.6% of voting rights. Until these results, Vivendi held 29.5% of Gameloft stock, and last week got the support of hedge fund Amber Capital, which owns 14.6%. The hostile takeover began in February and was approved by AMF. On May 4, Gameloft lost a petition to Court of Appeal of Paris, after which AMF set May 27 as the closing date of Vivendi’s tender offer. Gameloft was launched in 2000 by Ubisoft Ent. SA’s Michel Guillemot, and the takeover is viewed as the first step in a run by Vivendi on Ubisoft. The former has already amassed a 17.7% stake in Ubisoft and has signaled that it intends to purchase more stock.
Impact: After a decade of cutting overhead and divesting itself of subsidiaries, including its video game holdings, it seems surprising to see Vivendi in the hunt to get back into games. But the executive suite at the French conglomerate today is very different compared to even a few years ago. Today Vivendi is controlled by Vincent Bolloré through his Bolloré Group. The industrialist became the company’s largest shareholder in 2012 after he sold several television channels to Vivendi’s Canal+ Group for shares. By June 2014 he assumed the chairmanship of Vivendi’s supervisory board, a year after the firm had sold most of its interest to back to Activision Blizzard as the publisher went independent. Vivendi had crushing debt to deal with and the $8.17 billion it received in the deal made a big dent in the red ink. Flash forward to September 2015 and the Wall Street Journal reported that Vivendi was sitting on €9 billion in cash. Gameloft, valued at €700 million ($780 million) and now controlled at the tender offer’s cost of €225.6 million ($251 million), barely scratches Vivendi’s cash chest. By all accounts, Bolloré has his eyes on Ubisoft and is using Gameloft as a tool to bring the uncooperative Guillemot brothers to the negotiating table. The Guillemots instead have spent the last three months negotiating with major shareholders in an effort to bolster their own minority stake in Ubisoft to a solid 50-plus percent controlling block to fend off Vivendi. But at a valuation of €3.6 billion ($4 billion), Ubisoft is a much larger animal to swallow and Bolloré would much rather come to agreeable terms than mount a huge hostile takeover of Ubisoft.
But that still leaves the question of why the fixation on a major game industry acquisition? Bolloré Group has significant holdings in shipping, energy, agriculture, advertising (Havas), media, logistics and technology. Ubisoft’s broad aspirations to extend its game IP to film and theme parks makes it an attractive jewel to add to Bolloré’s other holdings. But the industrialist may have other reasons to go after the game publisher. According to Bloomberg L.P., the Vivendi chairman may be keen on beefing up the media side of his holdings to better equalize Bolloré Group with an eye to his children. Mister Bolloré intends to retire in 2022 on the bicentennial of the family business. The argument goes that he wants to split control of the Bolloré Group at that time between his two sons, Yannick and Cedric. So the interest in Ubisoft is less a solid strategy for Vivendi than stockpiling assets to give each of his sons a strong base to start with in their respective areas. The Guillemots may well prevail in holding Bolloré off from ripping away more than Gameloft. By any measure they have managed and grown Ubisoft into one of the primary global game publishers. But if Ubisoft falls victim to a hostile takeover, and there is a change in management, there will be a great deal of uncertainty. What happens at Gameloft in the coming months will be very telling.