Courtesy: Gameloft
By Chris Morris
March 1, 2016

Vivendi wants back in the video game business in a bad way.

Just hours after the board of directors at Gameloft rejected the company’s first hostile takeover offer, the French media conglomerate raised its bid from €6 ($6.67) to €7.20 ($7.82) per share.

Vivendi made the initial offer for the company’s outstanding shares on February 19 after increasing its ownership stake to 30%. (According to French law, once a buyer owns more than 30% of a company’s shares, they must make an attempt to purchase a controlling stake for a reasonable price. Investors, of course, have the right to reject that offer.)

Shares of the company surged more than 8% on Tuesday, eventually surpassing the new offer price.

Despite the increasingly ferocious battle, Gameloft is likely just a pawn in Vivendi’s long-term plan. Instead, Ubisoft, which has a much larger presence in the gaming world, could be the end goal. Vivendi has been steadily increasing the number of shares it owns in that company, and it now owns a 15.66% stake. That’s significantly more than the Guillemot family, whose ownership stands at roughly 9%. (The Guillemots still hold 16% of the company’s voting rights.)

Because both companies are owned by the Guillemot brothers, some analysts believe the dogged pursuit of Gameloft is an attempt to force the family to discuss a wider sale.

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If so, the Guillemots are fighting it tooth and nail. Last week, Ubisoft CEO Yves Guillemot led an executive team to Canada, where they met with potential investors to fend off Vivendi. Canada was a good starting point, since the company has major studios in Montreal, Quebec and Toronto and employs over 3,000 people in the country, but the Guillemots aren’t stopping there.

“As Yves has said, our continued growth as a global video game and entertainment leader depends on our ability to stay agile and creative,” the company said in a statement. “We are talking to investors in different regions to drive support for our strategy. We are committed to maximizing shareholder value and want our investors to fully understand our potential.”

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Vivendi sold its 85% stake in Activision-Blizzard in July 2013 for over $8 billion to reduce debt. In 2015, though, it showed strong interest in returning to the gaming world, quickly buying up shares of Gameloft and Ubisoft over the objection of company officials. By adding these game studios, Vivendi hopes to become an even bigger force in the European media world.

The clock is ticking to shore up additional shareholder support, though. Gameloft’s board will have a harder time rejecting the latest Vivendi offer, and Ubisoft’s next shareholder’s meeting is scheduled for September. Assuming Vivendi doesn’t increase its holding to 30% of the outstanding shares by that point, that’s when it is likely to press for a seat at the boardroom table.

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