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Vivendi would need to pay a 30 percent to take over Ubisoft, analysts say
June 28, 2017 / 5:34 PM / 21 days ago

Vivendi would need to pay a 30 percent to take over Ubisoft, analysts say

Vincent Bollore, Chairman of media group Vivendi, attends the company's shareholders meeting in Paris, France, April 25, 2017.Jean-Paul Pelissier

(This version of the JUNE 28 story deletes repeated phrase in paragraph 2)

By Mathieu Rosemain and Sophie Sassard

PARIS/LONDON (Reuters) - France's Vivendi (VIV.PA) would need to pay an estimated 30 percent premium on the price of Ubisoft's (UBIP.PA) shares to lure institutional investors and take control of the video games maker, according to several analysts.

Vivendi has gradually raised its stake in Ubisoft, best known for its Assassin's Creed and South Park video games, but so far Ubisoft's co-founder and CEO Yves Guillemot and his family have managed to fend off the media giant.

Vivendi currently holds 27 percent of Ubisoft's share capital and 24.5 percent of the voting rights.

If such a premium were necessary to take control of the company, Vivendi would have to pay out 5.4 billion euros ($6 billion) for the remaining shares in Ubisoft, a hefty price for Vivendi whose net cash position slumped to 473 million euros at the end of March from 6.4 billion euros at the end of 2015.

But Vivendi, led by billionaire Vincent Bollore, wants to grow in the advertising and video games sectors and will soon take control of ad group Havas (HAVA.PA), potentially leaving Ubisoft next in line.

It has gradually raised its stake in the business since 2015 and is asking for board representation. It has said it sees synergies between the two groups.

The Guillemot family owns 13.6 percent of Ubisoft and 20 percent of its voting rights.

"It's all a question of price," said Richard-Maxime Beaudoux, an analyst at Bryan, Garnier & Co who estimates any full bid from Vivendi would be in the range of 60-67 euros per share, compared with a 50.56 euro share price on Wednesday.

The Guillemot's have so far received the support of Ubisoft third-biggest investor, mutual fund giant Fidelity Investments, two sources close to the matter told Reuters.

Fidelity's 10 percent stake would help the Guillemot's block any attempt by Vivendi to elect a board member at the next general meeting in September, the sources added.

Fidelity and Vivendi declined to comment.

"Ubisoft's largest institutional shareholders are firmly sided with the current management team for now," said Timothy O'Shea, an analyst at Jefferies who estimated the necessary premium on the video games maker to be at least 30 percent.

"Investors are also concerned about brain drain; if Vivendi gains control we could see creative talent or executive departures," he added.

Other top institutional investors include BlackRock and Norges Bank.

A generous cash offer could even convince Ubisoft's CEO to stay, Beaudoux said.

"If there's a significant premium and Guillemot can stay, then (video game) developers would also stay," he said.

($1 = 0.8794 euros)

Additional reporting by Gwenaelle Barzic; Editing by Elaine Hardcastle

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