Vivendi Wins Majority Backing for Gameloft Takeover as Content Strategy Becomes Clearer

Vincent Bollore -Getty-H 2016
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"What is becoming clearer is that Vivendi seems to have decided on its strategy and is now in the process of executing it," says one analyst, who sees a possible bid for control of Ubisoft in the company's future.

French media company Vivendi, led by chairman and billionaire Vincent Bollore, appears to have succeeded in its efforts to take over video game firm Gameloft.

The French stock market regulator said Wednesday in a preliminary statement that Vivendi now controls a 61.7 percent economic stake in Gameloft, best known for its success with mobile games, and a voting stake of at least 55.6 percent after a tender offer for shares launched earlier this year. It acquired the stock at €8 ($8.91) per share, putting the company's total value at around €700 million ($780 million).

The news establishes video gaming as a third business for Vivendi in addition to music, as it owns Universal Music Group, and pay TV, where it owns Canal Plus and other assets.

Analysts say that it also strengthens Vivendi's attempts to acquire Ubisoft Entertainment — the gaming company known for Assassin’s Creed and other franchises, in which Vivendi already owns a stake of 17.7 percent — down the line.

"We think Vivendi’s next step, if it does acquire Gameloft, is to then bid for Ubisoft, although it may decide a substantial minority stake is sufficient," said Liberum Capital analyst Ian Whittaker. "Vivendi does have the balance sheet to support a deal [€4.8 billion net cash at the end of the first quarter 2016] and we suspect it may go with a full bid."

But it is expected to continue facing pushback from the Guillemot family, which has been running Gameloft and Ubisoft and tried to block Vivendi's tender offer in court. Vivendi has been looking to get representation on the Ubisoft board, but said in April that it had no plans to buy a controlling stake, at least over the next six months.

Vivendi has focused on moving from owning stakes in various companies to controlling businesses in Southern Europe and becoming more of an integrated media company.

Vivendi's content strategy is becoming clearer with the Gameloft news, according to Whittaker. "If our view is correct, then Vivendi will have a substantial third pillar in games to add to its music and Canal+ pay TV divisions and one that fits into its stated desire of having global content (although it then raises the question of why it sold its 62 percent stake in Activision Blizzard)," the analyst wrote in a report. "What is becoming clearer is that Vivendi seems to have decided on its strategy and is now in the process of executing it — the recent content acquisitions and deals; the agreement with Mediaset to buy the latter’s pay TV business; and now this deal suggests Vivendi knows what it wants and is now moving to the execution stage. We therefore would expect more announcements."

Vivendi recently acquired a large stake in Telecom Italia, the pay TV business of Italy’s Mediaset, as well as a Paris TV studio and a majority stake in DailyMotion, known as France's YouTube.