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My small part in Electronic Arts’s Ubisoft adventure
Electronic Arts has decided to sell its 14.9% stake in Ubisoft.
The move makes sense. At the time of EA’s purchase, Yves Guillemot said “we consider this operation as hostile”. Matching actions to his words, Ubisoft started taking steps to ensure that EA could not determine the company’s future.
The Guillemot enacted a special rule: anyone who has owned shares in the company for more than two years magically gets double voting rights. (You can see the details in the Ubisoft 2010 Annual Report – and just to be clear, I think that this was a direct response, but it may have been in place for some time.)
What does this mean in practice? Look at the table below:
So the Guillemot family have nearly twice as much control over the future of Ubisoft as their shareholdings would suggest. Plus, of course, the board of directors has six members: Claude Guillemot, Yves Guillemot, Michel Guillemot, Gerard Guillemot, Christian Guillemot and independent director Marc Fiorentino.
Even with the overhang gone from Ubisoft’s stock with the placement of EA’s holding in the market, anyone who thinks that Ubisoft is now vulnerable to a takeover is both wildly optimistic and fails to understand the efforts that the Guillemots have undertaken to ensure that they – and no-one else – determines the future of Ubisoft.
So what was my role in all of this?
It was pretty minor. In the early days of Lodestar Partners, I was hired, along with my partner Richard Williamson, by Talpa Capital, the investment fund of John de Mol, the founder of Endemol, inventor of Big Brother and extremely wealthy media maven.
The fund believed in the convergence of games, television and mobile and hired us to help them understand how the games industry worked: what are the drivers, who does what, and where is the value. (I still do this work. If you want to understand how the games industry works, email me).
We finished our project without making specific recommendations on investments (we were not positioning ourselves as investment analysts). But shortly afterwards, Talpa bought a big stake in Ubisoft. That was the stake which they eventually sold to Electronic Arts.
So in a small way, I helped kickstart the six year relationship between EA and Ubisoft which made investment bankers salivate over a deal to sell Ubisoft.
And now they’re salivating all over again. I imagine that they are dusting off their decks and visiting Activision, Disney, Warner and others to say “Electronic Arts have sold their stake; Ubisoft is in play again.”
I think they’re wrong. I think the market thinks that they are wrong (Ubisoft’s share price is down after the placement of a 15% stake and the removal of the overhang on the stock. It’s not as if the market is immediately pricing in an acquisition).
But something has to keep the bankers busy.
What do you think? Who should buy Ubisoft? Or should they stay independent? Let me know in the comments.