A slide in Ubisoft's (UBIP.PA) shares on Wednesday has revived talk of a takeover by media giant Vivendi (VIV.PA), even though the video game company's founding Guillemot family has consistently rejected any possibility of such a deal.
The maker of the Assassin's Creed and South Park video game, which reported a record annual operating margin late on Tuesday but cut its mid-term sales target, reckons a sound financial performance is the best way to fend off any Vivendi offensive.
Ubisoft shares fell as much as 7.9 percent on Wednesday following its results. At the close, Ubisoft shares were 3.62 percent lower at 46.97 euros.
"We are well aware that Bollore has been waiting for a stumbling block to step in," a source close to Vivendi said, referring to the media company's billionaire chairman Vincent Bollore.
Vivendi first bought a stake in Ubisoft in 2015 and raised it in 2016, prompting the Guillemot family to court Canadian investors to fend off any hostile approach. By the end of last year Vivendi had boosted its holding to 25 percent.
Another person familiar with the situation said on Wednesday that the drop in price was probably not enough for Vivendi to make a bid as Ubisoft shares were still up 40 percent since the start of the year, partly on expectations of a Vivendi approach.
The source also dismissed the likelihood of any merger approach in the near term, saying it was still "early days".
Kepler Cheuvreux analyst Charles-Louis Scotti said time was on Vivendi's side. He said if Ubisoft does meet it's full-year targets, Vivendi's investment would produce a very positive return. But if Ubisoft falls short, it would end up being a cheaper acquisition for Bollore's media giant.
"The ideal window of opportunity for a transaction on Ubisoft is later on this year, or early next year," Bryan, Garnier & Co analyst Richard-Maxime Beaudoux said, also adding that time was on Vivendi's side in its pursuit of Ubisoft.
(Reporting by Wout Vergauwen; additional reporting by Mathieu Rosemain in Paris; editing by David Clarke)