Ubisoft Shareholders Launch Legal Battle Against Company, Demand Renegotiation Of Tencent Deal
Ubisoft shareholders including AJ Investments and other minority shareholders announced they have launched a legal battle against the company and are demanding a renegotiation of the recently announced deal with Tencent.
At the end of March, Ubisoft announced it was created a new subsidiary that would house its Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six brands. Along with these IPs and their back catalogs the new subsidiary would also become the new home to Ubisoft’s development teams based in Montreal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia and any IP they currently have in development.
The creation of the subsidiary was announced after the company made a deal with Chinese investor and developer Tencent who would invest €1.16 billion into the subsidiary in exchange for 25% of it.
Since the deal was announced, Ubisoft’s stock has fallen over 26%. It had hit a high of €14.48 on March 28th, but has since fallen to €10.65.
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Now, in a press release shared by Insider Gaming, AJ Investments announced it and a coalition of shareholders are “initiating legal proceedings in France.”
The company added it is “demanding that a French court compel Ubisoft to convene an Extraordinary General Meeting” so that shareholders can vote to have Ubisoft renegotiate the Tencent deal and distribute an extraordinary dividend. And it wants both Tencent and Guillemot Brothers Holding to be barred from voting.
Specifically, it wants the Tencent deal renegotiated because “shareholders have no clarity how the deal that was announced last week will eventually benefit shareholders of Ubisoft.”
The company elaborated that due to the stock price falling more than 20% it “signals a clear verdict from investors — the proposed deal is deeply flawed, structured to bypass mandatory public offer rules, and designed to entrench control by the Guillemot family, who now hold less than 10% of the company’s economic interest.”
As for the distribution of an extraordinary dividend, it allows shareholders to get “€23 per share in cash” and allows them to avoid “further asset sales or dilution” that it claims would not deliver value to shareholders.
Finally the company stated that shareholders should choose on whether Ubisoft “sell the core IPs to the Tencent as a whole or sell them the 25% stake in a subsidiary that was already announced.”
What do you make of this move by AJ Investments?
The beginning of the end.
Tencent is the Vince McMahon of videogames. This will all end with Tencent owning the subsidiary and all the valuable properties, while the French end up with Petz and Red Steel if they're lucky.