AJ Investments Calls for Ubisoft Delisting, New CEO and Takeover
– 2 min read
Following the sharp fall in Ubisoft's share price, minority shareholder AJ Investments is calling for significant action. In an open letter, the Slovakian private company/hedge fund proposes selling the company, delisting it and appointing a new CEO.
Ubisoft's share price is under pressure. Following the release of Star Wars Outlaws and media reports of a "weak launch" in the UK, based on incomplete data, as well as J.P. Morgan's reduction of sales expectations, the share price fell significantly to a ten-year low. Market capitalisation fell below 2 billion Euros. In the last year alone, the share price has fallen by 50 per cent and in the last five years by almost 80 per cent.
Yesterday, the share price fell further after AJ Investments and Partners released an open letter to management, investors and shareholders. AJ Investments, which owns less than one per cent of the French company's shares, expresses its dissatisfaction with Ubisoft's management and its ability to deliver long-term value to shareholders, citing among other things the postponement of Rainbow Six Siege and The Division to the 2025 line-up. This refers to mobile versions. AJ Investments and Partners is a private company/hedge fund focused on investments in public companies based in Bratislava, Slovak Republic.
AJ Investments believes that Ubisoft is currently very undervalued. The share price is currently around 13.68 Euros, while AJ Investments believes that the share price should be between 40 and 45 Euros to reflect the value of the company. However, they are dissatisfied with the current management and suggest several options to increase the value of the company. These include the delisting of Ubisoft "by PE firms or Guillemot family + Tencent at fair price", a sale process of the company against the majority shareholding of the Guillemot Family to a strategic investor and the introduction of a new CEO "who will optimise the cost and studio structure for more agile and competitive company as Ubisoft should be". The fourth and final proposal reads: "We will use the French minority law to collect enough shareholders to start proxy fight and initiate Sale Process of Ubisoft to increase shareholder value for all shareholders."
Juraj Krupa from AJ Investments wrote in this open letter: "The main reason why the valuation is so low compared to the peers is that Ubisoft at current state is mismanaged and shareholders are hostages of Guillemot family members and Tencent who take advantage of them. Management is focused on pleasing investors with beating quarterly results and not focusing on long-term strategy to provide exceptional experience for the gamers. Our company has extensive knowledge about the gaming industry and we were long-term shareholder in Activision Blizzard and we started our Ubisoft position couple weeks ago and still adding to it."
In addition to the measures already announced (150 million Euros by 2024 and 200 million Euros by 2025), they call for further cost reductions and workforce optimisation, such as the sale of studios working on non-core games. At the same time, the company should focus on core IPs such as "Rainbow Six Siege, Assassin's Creed, Far Cry, Watch Dogs and Tom Clancy's titles such as Sprintel Cell (sic!)" and re-evaluate the current management team and governance structure.
Ubisoft's share price is currently stable. The company's management has not yet publicly responded to AJ Investments' open letter.
Written by
