Multiple private equity firms are studying the business of French gaming giant Ubisoft, according to a recent report from Bloomberg. Firms including PE giants Blackstone and KKR have expressed interest in an acquisition of the publisher. KKR and Blackstone are among the largest private equity firms in the world managing $459B and $649B in assets respectively. KKR is one of the largest shareholders of Epic Games. Shares in Ubisoft jumped over 10% to the news. Shares of publishers EA, Activision Blizzard and Take-Two also moved higher today.
Despite being explored for a buyout, no concrete talks have started between Ubisoft and suitors. No offer has been made to Ubisoft’s board either. In February, Ubisoft bosses expressed interest in an acquisition if it was in the best interest of shareholders. Ubisoft shares fell 44% year over year as new live service titles such as Hyperscape and Ghost Recon: Breakpoint failed to capture interest. This is not the first time a company has explored an interest in acquiring Ubisoft. Back in 2018 Ubisoft successfully defended itself against a hostile takeover by Vivendi. Vivendi slowly built up ownership of Ubisoft but was later forced to sell off its 27% stake in the company.
M&A activity within the gaming industry has been prolific over the last year. Microsoft recently closed on their $7.5 billion acquisition of Bethesda parent Zenimax. Back in January Microsoft also announced its intention to acquire publisher Activision Blizzard for 68.7 Billion. The same month Zynga entered into a merger agreement to be purchased by Take-Two Interactive for 12.7 Billion. Over the last year, Sony has announced acquisitions of 8 gaming studios, including Housemarque, Bungie, Bluepoint, and others, with recent rumors of yet another major acquisition from the company.
Despite their size, large video game publishers could become targets for M&A from tech giants and PE firms. Tech companies such as Google and Amazon have invested heavily in gaming but have not found much success. Streaming platforms like Google Stadia and Amazon Luna failed to resonate with gamers. While companies like EA, Ubisoft and Take-Two are large, an acquisition of them would be pocket change for these tech giants. It would not be unreasonable for a company like Amazon to make an acquisition of a publisher to add to its portfolio of gaming services. Private equity firms may be attracted to publishers’ high growth potential and recurring revenue from microtransactions.
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