In an overall assessment of Ubisoft’s stock value, Wedbush Morgan’s Michael Pachter said that EA needs to either buy Ubisoft or sell their 18 percent stake in the company.
During the month of December, 2004, EA purchased 18.4 percent of the available Ubisoft stock. In what was considered by Ubisoft to be the start of a hostile takeover attempt, EA never made any more moves on the company. With their current share of the public stock, EA has no say in how Ubisoft does business. The Guillemot family, the founders of Ubisoft, still retain 22.8 percent of the stock.
With $2.4 billion in cash, Pachter believes EA investors need to make a move or move on. “In our view, EA shareholders can decide individually whether an investment in Ubisoft is prudent,” wrote Pachter. “We therefore believe that EA should either complete its acquisition of Ubisoft or divest of its minority interest. With approximately $2.4 billion in cash, EA could complete its acquisition of Ubisoft at any time.”
If EA was to attempt to take the next step in acquiring the French publisher, they would need clearance from the US Department of Justice, due to antitrust concerns, before any purchase could be made. Even more stock purchases would be scrutinized at this stage.
Pachter thinks the future is bright for Ubisoft, believing that strong lineups of games for the newest consoles and established franchises will show steady growth for the company. They currently project a rise in stock from $32.90 to $44.74 within the next year, giving Ubisoft stock a “buy” rating.
