Ubisoft’s activist investor is finally making their big play, after the company revealed their plans to form a subsidiary with TenCent.
As reported by Insider Gaming, AJ Investments has shared an open letter making several demands from Ubisoft and TenCent.
In summary, they want to change the plans completely, from forming a Ubisoft subsidiary with TenCent, to a complete €4 billion direct asset sale from Ubisoft to TenCent. They also then want shareholders to get dividends at a rate of €23 per share.
As before, AJ Investments claim they represent a group of minority investors in Ubisoft, and they allege wrongdoing by Ubisoft and TenCent. They are making their case to fellow shareholders, that they need to stop these plans because the shareholders will be losing out in the deal.
Now, for those who didn’t know, the SA in Ubisoft SA stands for Société Anonyme. This is a particular corporate structure under French law, that gives the founders, the Guillemots, a lot of advantages and benefits.
So, AJ Investments can’t easily pull off a shareholder coup to oust the Guillemots, as has happened many times in American companies. So this open letter has to make these demands in such a way that they compel all the other shareholders to join them. If that works, they then have to convince a French court to take their case. And if they pull all of this off, then they have to get all the shareholders to vote in agreement to make the direct sale happen.
Seeing as Ubisoft and TenCent have not directly addressed AJ Investments and their open letters, we don’t know how successful they have been in actually getting the other shareholders on their side. For those who don’t remember, AJ Investments started this entire crisis within Ubisoft when they alleged that the Guillemots and TenCent were colluding to get more shares back to the Guillemots.
AJ Investments also spread the rumor that Ubisoft was considering selling franchises to Microsoft and EA. While they managed to force the Guillemots to make changes in Ubisoft, we don’t know if they still have support from 10 % of Ubisoft’s shareholders (which may represent everyone who isn’t TenCent and the Guillemots) as they claimed before.
If you’re a fan of Ubisoft games, and support the developers, we have to admit that it isn’t really clear if there’s any party you should side with here. Activist investors have simultaneously been praised for unlocking company value, and condemned for extracting company value. For the people who work under these managers scheming against each other, it isn’t always clear who will have your back and make sure you keep your job, or who has your best interests at heart.
But if the idea of a Ubisoft subsidiary seemed promising, AJ Investments intends to derail that promise, for an arrangement that benefits them. We’ll have to wait and see if they really did manage to sway their fellow shareholders to get their way, or if this grand public relations operation is secretly mostly hot air. But as always, we are hoping for the outcome that best protects Ubisoft’s developers, and allows us to enjoy more Ubisoft games in the future.
