Assassin’s Creed, Far Cry, and Rainbow Six future is still uncertain. Ubisoft shareholders demand renegotiation of deal with Tencent

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Based on additional details provided by Tom Henderson through Insider Gaming, the lesser shareholders connected with Ubisoft have reportedly become more vocal about their stake in the recently disclosed deal with Tencent. Specifically, AJ Investments and a rising group of shareholders are said to have sent an open letter to the Ubisoft board, urging them to convene an Extraordinary General Meeting (EGM) and initiate legal actions to reconsider the terms of the deal with Tencent.

Investors’ pressure

The letter Henderson got requests the Ubisoft board to arrange the previously mentioned Extraordinary General Meeting (EGM). In this meeting, shareholders could vote on two crucial resolutions concerning the agreement with Tencent.

1st Scenario: The initial plan is to revise the contract and make it a straight-up asset purchase by Tencent, worth at least 4 billion euros.

2nd Proposal: The second matter at hand pertains to the distribution of an exceptional dividend. If Ubisoft gets sold, it would return approximately 23 euros per share to shareholders, amounting to 3 billion euros. Meanwhile, 1 billion euros would be set aside to cover outstanding corporate debts.

In the content of the letter we read:

We’re asking for a French court to force Ubisoft to hold a special shareholders meeting, allowing every shareholder to cast their votes on two crucial decisions.

  1. Renegotiate the Tencent Deal – This transaction must be restructured into a direct asset sale to Tencent for no less than €4 billion, the valuation already accepted by both Tencent and Ubisoft’s board. At the moment, shareholders have no clarity how the deal that was announced last week will eventually benefit shareholders of Ubisoft.
  2. Distribute an Extraordinary Dividend – Following the sale, Ubisoft shall return €23 per share in cash to shareholders (totaling €3 billion), while preserving €1 billion to cover remaining corporate net debt.

Following the announcement of their partnership with Tencent, Ubisoft’s stock price has dropped more than 20%, indicating skepticism among investors about the potential advantages of this deal, as expressed by AJ Investments and other shareholders.

Criticism of the transaction

Critics allege that Ubisoft’s leadership intentionally bypassed necessary processes and concentrated more power within the Guillemot family, even though they hold less than 10% of the shares. Remarkably, they still wield significant control over the company’s day-to-day activities.

In the letter we can read:

[…] The suggested agreement appears to have significant issues. It seems to be crafted to circumvent necessary public offer requirements and strengthen the control of the Guillemot family, who currently possess less than 10% of the company’s economic ownership. At this crucial juncture for shareholders, we feel it’s imperative to take action. If no intervention is made promptly, there’s a risk that the company may continue with additional asset sales or dilution, without providing substantial value to its shareholders. […]

Some investors are advocating that Tencent should not have a say in this particular deal, given its direct involvement in the negotiation process. Additionally, they aim to limit the voting power of Guillemot Brothers Holding regarding shares associated with Tencent.

What’s next?

As per Henderson, we are at a pivotal juncture regarding Ubisoft’s future. The shareholders believe that unless swift action is taken, the company could potentially make catastrophic moves, and they no longer wish to postpone their intervention.

We propose that management should thoroughly outline the advantages of the agreement for shareholders, providing a comprehensive and understandable explanation (rather than a lengthy, unclear summary on two A4 pages), since they are the business owners. Following this, we will hold a vote regarding the decision. The options are either selling all key intellectual properties to Tencent or transferring a 25% stake in a previously announced subsidiary to them. Shareholders can then decide their preferred choice. It’s crucial to act now—before any potential harm becomes permanent.

Currently, it remains uncertain if Ubisoft’s leadership will opt for an emergency shareholders gathering or opt for contract renegotiations instead. However, the mounting pressure from investors and the volatile state of the stock market raise questions about the company’s and its flagship brands’ future prospects.

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2025-04-04 15:32