Assassin's Creed, Far Cry, and Rainbow Six future is still uncertain. Ubisoft shareholders demand renegotiation of deal with Tencent
Further information revealed by Tom Henderson shows that Ubisof's investors have decided to take matters into their own hands. A growing coalition of shareholders has started legal proceedings and is demanding, among other things, a renegotiation of the deal with Tencent.
According to further information revealed by Tom Henderson (via Insider Gaming), investors associated with Ubisoft are increasingly demanding their share in the recently announced deal with Tencent. The minority shareholder, AJ Investments, along with a growing coalition of shareholders, has allegedly issued an open letter to the Ubisoft board, demanding the convening of an Extraordinary General Meeting (EGM) and taking legal steps to renegotiate the of the agreement with Tencent.
Investors' pressure
The letter that Henderson received calls on the Ubisoft board to organize the aforementioned EGM, which would allow shareholders to vote on two key resolutions related to the agreement with Tencent.
The first option involves renegotiating the agreement and converting it into a direct asset sale to Tencent for at least 4 billion euros. The second resolution concerns the payment of an extraordinary dividend. In the event of the sale of Ubisoft, it would return 23 euros to shareholders for each share, totaling 3 billion euros, while leaving 1 billion euros to cover corporate debt.
In the content of the letter we read:
We are demanding that a French court compel Ubisoft to convene an Extraordinary General Meeting (EGM), giving all shareholders the right to vote on two critical resolutions:
- 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.
- 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.
Investors underlined that since the announcement of the agreement with Tencent, Ubisoft's share price has already fallen by over 20%. According to AJ Investments and other shareholders, this is a clear signal that the market doesn't believe in the benefits resulting from this agreement.
Criticism of the transaction
Shareholders also accuse Ubisoft's management of deliberately omitting mandatory procedures and strengthening control over the company by the Guillemot family, which, despite owning less than 10% of the shares, still has a decisive influence on the company's operations.
In the letter we can read:
[…] the proposed deal is deeply flawed, structured to by 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. […] We believe this is a critical moment for shareholders. Without immediate intervention, the company may pursue further asset sales or dilution without delivering value to shareholders.
Investors are also calling for Tencent to be excluded from voting on the transaction because of its direct stake in the negotiation outcome. Furthermore, they seek to restrict the voting rights of Guillemot Brothers Holding concerning shares linked to Tencent.
What's next?
According to Henderson, this is a critical moment for the future of Ubisoft. Shareholders claim that without immediate intervention, the company may make disastrous decisions, and they don't intend to delay any longer.
We suggest that management will explain the benefits of the deal to the shareholders in detail (not 2 A4 pages from where many details are not clear) as the owners of the business and we will have a vote on it. Sell the core IPs to the Tencent as a whole or sell them the 25% stake in a subsidiary that was already announced. Shareholders will choose what they prefer. […] The time to act is today—before the damage becomes irreversible.
At the moment, it is not known whether Ubisoft's management will choose to call an extraordinary meeting or engage in renegotiating the deal. Nevertheless, investor pressure and the stock market situation cast doubt on the future of the company and its key brands.
