A minority shareholder coalition, led by AJ Investments, has demanded that Ubisoft hold an Extraordinary General Meeting (EGM) to allow shareholders to vote on its controversial deal with Tencent, announced last week. The transaction, which involves the transfer of three major Ubisoft franchises—Assassin’s Creed, Far Cry, and Rainbow Six Siege—into a newly created subsidiary, has raised significant concerns among investors about its impact on shareholder value.
In an open letter sent to Insider Gaming, AJ Investments, alongside other concerned shareholders, is calling for two critical resolutions to be put before Ubisoft’s shareholders during the proposed EGM. The primary issues outlined in the letter focus on the structure of the deal with Tencent and its potential benefits for investors.
The Proposed Resolutions
Resolution 1: The shareholder group is demanding that Ubisoft renegotiate the deal with Tencent. Specifically, they want the transaction to be restructured into a direct asset sale for no less than €4 billion—an amount already agreed upon by both Ubisoft's board and Tencent. The shareholders argue that, at present, there is insufficient clarity on how the deal will benefit them.
Resolution 2: The shareholders are also calling for Ubisoft to distribute an extraordinary dividend of €23 per share in cash following the sale. This dividend, totaling €3 billion, would return significant value to investors, while also preserving €1 billion to cover the company's net debt.
According to the coalition, the proposed deal, which involves Tencent acquiring a 25% stake in the new subsidiary, has caused Ubisoft’s stock to plummet by 24% since its announcement. The sharp decline in share price, accompanied by unusually high trading volumes, signals a lack of confidence in the transaction among investors.
Concerns Over Control and Shareholder Rights
The group’s frustrations with the deal are further exacerbated by concerns about the control it will grant to the Guillemot family, who hold less than 10% of Ubisoft’s economic interest but continue to exert significant influence over the company. AJ Investments contends that the deal is structured in a way that could bypass mandatory public offer rules and entrench the Guillemot family’s power within the company.
To address these concerns, the minority shareholder coalition has proposed additional measures to ensure a fair voting process. They are calling for Tencent to be excluded from voting on the deal, given its direct financial stake in the outcome. Similarly, the coalition wants the voting rights of the Guillemot family to be limited to their non-Tencent-linked shares.
More:Ubisoft Revenues Plunge
The Legal Challenge
The shareholders’ demand for an EGM is not only a call for greater transparency and accountability from Ubisoft’s management but also a legal challenge. AJ Investments and its coalition are seeking to compel Ubisoft through French courts to convene the meeting. If the EGM is held, the shareholders will have the chance to vote on the future of the Tencent deal and its implications for the company’s long-term direction.
The shareholders argue that without swift intervention, Ubisoft could pursue further asset sales or stock dilution that would not deliver value to shareholders. They believe that restructuring the deal and returning cash to investors through an extraordinary dividend could restore trust in the company’s future.
Next Steps for Shareholders
In their press release, the coalition has urged other minority shareholders to join their legal efforts to protect value and demand greater accountability from Ubisoft’s management. They argue that now is the critical moment for action, warning that if the deal goes through as planned, the damage to shareholder interests could become irreversible.
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