Ubisoft: stock dives - Oddo says buy after Tencent deal
(CercleFinance.com) - Ubisoft last night announced that Tencent had acquired a stake in the company, investing 300 million euros in Guillemot Brothers (200 million euros in share purchases and 100 million euros in a capital increase) to take a 49.
9% stake in this holding company (and only 5% of the voting rights), which holds 13.6% of Ubisoft shares.
The transaction is based on a valuation of 80 euros per share. The new Guillemot/Tencent concert has a 19.8% stake in the French video game group (24.9% of voting rights), compared to 15.4% before for the Guillemot concert (21.4% of voting rights), Oddo points out.
The new Guillemot/Tencent concert will be able to increase its stake to 29.9% of the capital and voting rights.
Oddo says that these changes in Ubisoft's capital have no impact on its governance and Tencent has no operational veto. The strategic partnership set up in 2018 between both groups continues (mobile development of Ubisoft franchises + launch of Ubisoft PC games in China).
The bad news is that this transaction is mainly interesting for the Guillemot family (high premium on the shares sold within their holding, no change in governance, lock-in of Tencent's stake...) and does not involve the minority shareholders (who will however benefit from share buybacks on the market by the new concert) the analyst adds.
Analysts still believe that the company is undervalued despite significant operational difficulties and therefore remain positive on the stock with an unchanged target of 55 euros, maintaining their Outperform rating on the stock.
For the record, the share is currently in a spin - down 14% in late morning trading.
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The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
9% stake in this holding company (and only 5% of the voting rights), which holds 13.6% of Ubisoft shares.
The transaction is based on a valuation of 80 euros per share. The new Guillemot/Tencent concert has a 19.8% stake in the French video game group (24.9% of voting rights), compared to 15.4% before for the Guillemot concert (21.4% of voting rights), Oddo points out.
The new Guillemot/Tencent concert will be able to increase its stake to 29.9% of the capital and voting rights.
Oddo says that these changes in Ubisoft's capital have no impact on its governance and Tencent has no operational veto. The strategic partnership set up in 2018 between both groups continues (mobile development of Ubisoft franchises + launch of Ubisoft PC games in China).
The bad news is that this transaction is mainly interesting for the Guillemot family (high premium on the shares sold within their holding, no change in governance, lock-in of Tencent's stake...) and does not involve the minority shareholders (who will however benefit from share buybacks on the market by the new concert) the analyst adds.
Analysts still believe that the company is undervalued despite significant operational difficulties and therefore remain positive on the stock with an unchanged target of 55 euros, maintaining their Outperform rating on the stock.
For the record, the share is currently in a spin - down 14% in late morning trading.
Copyright (c) 2022 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.