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Ubisoft shares fall as gaming group cuts forecasts for 2019

Shares in Ubisoft saw their sharpest decline in almost a year on Wednesday, after the French video games maker, which is fighting to stay independent of Vivendi, cut its sales forecast for the fiscal year ending March 2019.

Investors sent Ubisoft shares down more than 3 per cent by late afternoon, a day after the maker of Assassin’s Creed and Just Dance said it had recorded total annual sales of €1.46bn in the 12 months ending March 2017, at the bottom end of its target range. Ubisoft cut its sales forecast for the fiscal year ending March 2019 from €2.2bn to €2.1bn.

Ubisoft has been fighting to remain independent of its largest shareholder Vivendi, amid creeping control by billionaire Vincent Bolloré’s media conglomerate that also owns Universal Music Group and the Canal Plus television business.

In December Vivendi increased its stake from 24 per cent to 25.15 per cent, a move the games maker described as “another indication that Bolloré and Vivendi are continuing an ill-advised and value-destructive approach of trying to take creeping control of companies like Ubisoft”.

Alain Martinez, chief financial officer of Ubisoft, said in a conference call on Tuesday: “We still consider that there is a lot of value to create at Ubisoft and we still consider that our independence is the best guarantee to create this value.”

A drop in its share price could leave Ubisoft more vulnerable to a takeover. In June, a six-month statement of intent from Vivendi to not make an offer for Ubisoft will expire, representing another important milestone in the relationship between the two groups. If Vivendi’s stake in Ubisoft crosses the 30 per cent threshold of either ownership or voting rights it will be forced to launch a full takeover.

Neil Campling, head of global technology, media and telecom research at Northern Trust Capital Markets, wrote in a note that Vivendi would have double voting rights in November “which would theoretically trigger a mandatory bid having crossed the 30 per cent mark”.

Ubisoft’s full-year results, which show record-high digital revenue and back-catalogue sales, illustrate how its business model is evolving towards a great proportion of recurring revenues as it tries to keep players engaged for longer. This allows the group to reduce its dependence on new releases.

Digital revenues increased from 32 per cent to half of total sales during the fiscal year.

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