Gameloft Climbs After Vivendi's Hostile Bid
Shares of Gameloft.com (OTC: GLOFY) have surged after French media conglomerate Vivendi launched a hostile takeover bid valuing the video game maker at €513 million (about $570 million). But, Vivendi needs to shell out more to make shareholders tender their shares.
Vivendi, which holds 30 percent in GameLoft, offered €6 apiece for the remaining shares of the French gaming company. The proposed acquisition of Gameloft would help Vivendi make further inroads in the video game market.
"Video games constitute content in their own right and now represent a significant part of the entertainment and media market, and mobile gaming is the segment expected to record the fastest growth," Vivendi said in a statement.
The price of €6 per Gameloft share represents a premium of 9.5 percent over Thursday's closing price, and 50.4 percent over the share price on October 14, 2015, prior to Vivendi's announcement that it became shareholder of Gameloft.
But, the stock gained 17 percent on Friday on the Paris exchange and closed the session at €6.40, indicating that investors are expecting Vivendi to raise the bid. Gameloft's sponsored Level 1 ADR trading on the OTC market in the United States also rose 9 percent.
The Bigger Picture
Ultimately, Vivendi is eyeing Ubisoft Entertainment SA – the owner of popular games like "Assassin's Creed." The Gameloft offer could be the first step toward that effort. Vivendi, which wants to develop as a global leader in content and media, had bought 15 percent of Ubisoft. Both Gameloft and Ubisoft are led by the Guillemot brothers.
Gameloft, the owner of established gaming franchises such as "Asphalt" and "Order & Chaos," generated sales of €256.2 million 2015, up 13 percent year on year. Fourth-quarter sales grew 9 percent to €65.4 million. For the fourth quarter, monthly active users averaged 147 million and daily active users averaged 19 million.
In 2015, Gameloft was ranked the #2 game developer in the world on iOS and Google Play by the combined number of games downloaded, according to the rankings from App Annie. Gameloft released 16 new titles in 2015 including "Dragon Mania Legends," "Puzzle Pets" and "Immortal Odyssey."
Vivendi and Gameloft share many commonalities, including French roots, an international dimension and a similar understanding of cultural diversity to meet the expectations of consumers in each country.
Gameloft said it will issue a statement after the board meeting, which has been convened for next week. Until then, no further comments will be made regarding this unsolicited bid. Both Gameloft and Ubisoft compete with Activision Blizzard, Inc. (NASDAQ: ATVI) and Electronic Arts Inc. (NASDAQ: EA).
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