VIV Vivendi SE

   By Alberto Delclaux and Sarah Sloat 
 

Shares in Ubisoft Entertainment SA (UBI.FR) gained Wednesday after France's Vivendi SA (VIV.FR) said it was abandoning a power struggle with the videogame maker by selling its entire stake for 2 billion euros ($2.46 billion).

Vivendi, which first bought a stake in Ubisoft three years ago, said it would sell its 27.27% stake for EUR66 per share. As part of the transaction, Tencent Holdings Ltd (0700.HK) will take 5% in the company and support Ubisoft's expansion in China, Ubisoft said.

At 0836 GMT, Ubisoft shares traded 5.0% higher at EUR71.98, while Vivendi shares gained 1.7% to EUR21.76. Although the sale represents a reversal for Vivendi, it said the EUR2 billion price tag is more than double the EUR794 million it spent on building its stake over the past three years.

The deal represents the end of tensions between Vivendi and Ubisoft, letting the videogame maker escape the potential takeover it has been dreading since Vivendi first bought a stake in 2015. Ubisoft has opposed Vivendi's moves to build its stake and to its taking of any board positions, saying Vivendi would destroy shareholder value.

"Ubisoft's management showed that David could beat Goliath twice in a row," say analysts at Bryan Garnier, referring to the hostile overtures by Electronic Arts (EA) in 2004 and Vivendi about a decade later.

Bryan Garnier said the deal represented "the only positive way forward," and estimated Vivendi's capital gain at EUR1.2 billion.

In addition to Tencent, Ubisoft said the Ontario Teachers Pension Plan is buying a 3.4% stake in the company.

"The entry of these two high-profile investors in Ubisoft's share capital validates Ubisoft's strategy and confirms the value creation potential for its shareholders," Ubisoft said.

The company also has agreements to sell 3 million shares to Guillemot Brothers SE, a minority shareholder, and 7.59 million shares to Ubisoft itself. The Guillemot family founded Ubisoft about three decades ago.

Vivendi will no longer be a Ubisoft shareholder and agreed not to purchase any Ubisoft shares for five years. The company does, however, plan to strengthen its position in the videogame sector, it said.

Write to Alberto Delclaux at alberto.delclaux@dowjones.com and Sarah Sloat at sarah.sloat@wsj.com

(END) Dow Jones Newswires

March 21, 2018 05:13 ET (09:13 GMT)

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