Shareholders question Ubisoft and Tencent agreement and demand transparency

A Ubisoft is under strong pressure from its minority shareholders, who demand a renegotiation of the agreement with Tencent and greater transparency about the impacts of the transaction. Led by AJ Investments, the group sent an open letter, to which Insider Gaming had access, asking for the convening of an Extraordinary General Meeting (EGM) for a vote on the deal.

And it's no wonder: since the announcement of the agreement, Ubisoft's shares have fallen more than 20%, reflecting a strong negative market reaction. Trading volume has surged, showing investors' concern about the company's direction.

The details of the agreement and the shareholders' revolt

The controversial agreement involves the transfer of rights to three of Ubisoft's biggest franchises - Assassin's Creed, Far Cry, and Rainbow Six Siege - to a new subsidiary. In return, Tencent will invest 1.16 billion euros, acquiring 25% ownership, which sets a valuation of 4 billion euros for the company's assets.

However, shareholders have not swallowed the terms of the deal. AJ Investments argues that there is no clarity about the benefits of the transaction and that the structure adopted could be detrimental to the company in the long run. The central question is: does Ubisoft really benefit from this agreement?

Proposals to reverse the scenario

The open letter suggests two resolutions to be voted on at the EGM:

Restructuring of the agreement: Direct sale of assets to Tencent, ensuring a minimum value of 4 billion euros.

Distribution of extraordinary dividends: Payment of 23 euros per share, totaling 3 billion euros for shareholders. The remaining amount would be used to cover Ubisoft's debt.

In addition, the group proposes preventing Tencent from voting at the EGM, as the company has a direct interest in the negotiation. They also request the limitation of voting rights of Guillemot Brothers Holding, linked to the Guillemot family, founders of Ubisoft, which currently holds less than 10% of the economic capital, but could strengthen their control through this transaction.

An agreement that could change the course of Ubisoft

The uncertainty about the future of Ubisoft has created great tension among investors and in the market as a whole. Many question whether the company's management is trying to structure the deal to avoid mandatory rules on public offers and whether the influence of the Guillemot family is being unfairly favored.

Now, it remains to be seen if Ubisoft will yield to the pressure and revise the terms of the agreement with Tencent. Otherwise, shareholders seem willing to take the fight further and ensure that the company does not give up its main franchises without adequate compensation.