(BFM Bourse) – The Ubisoft title has jumped to a peak since last October while the French video game publisher appears (very) weakly valued in view of the premium that Microsoft is about to pay to acquire Activision.
Already at work for years, the consolidation among video game publishers is taking on a whole new look as Microsoft is about to buy Activision Blizzard on the basis of a valuation of 68.7 billion dollars, this which would make it – by far – the biggest acquisition ever made by the Californian giant. This operation, which will reshape the balance of power within the sector since it would make Microsoft the de facto world number 3 behind Sony and Tencent, comes a week after the takeover of Zynga (publisher of Farmville in particular) by Take-Two , creator of GTA, Red Dead or NBA 2K, for 12.7 billion dollars. Nine months after the formalization of the takeover for 7.5 billion dollars of ZeniMax Media, parent company of the emblematic publisher Bethesda, in particular at the origin of Fallout and Doom, the Redmond firm is thus accelerating significantly in video games .
Its takeover project of nearly 70 billion dollars announced on Tuesday is fueling speculation around other video game publishers, and Ubisoft takes off by 11% to 50.2 euros around 4 p.m., the highest since the beginning of last October. Ubisoft owns many successful franchises such as Assassin’s Creed, Far Cry or Watch Dogs.
Because Ubisoft is now an ideal target. By its size (more than 2 billion euros in revenue over the last 12 months) but also and above all by its valuation, which offers a strong discount compared to that of its comparables. This is in particular the opinion of Charles-Louis Planade, an analyst at Midcap, who maintained his recommendation to buy and his target at 119 euros on the Ubisoft share on January 6, when it was languishing around 41 euros. , pointing in particular to the “still extremely speculative context in the sector”.
Next on the list?
In terms of valuation, Xavier Girard, equity manager at Milleis Banque, points out that “Microsoft is paying Activision at a price equivalent to 10 times its annual turnover, when Ubisoft is currently paying 3 times” its own. If we refine this valuation ratio to the last 12 months, i.e. at the end of September 2021, Microsoft is preparing to pay out precisely 7.6 times the revenues accumulated by Activision over its last four quarters, while Ubisoft is valued at 2, 7 times its sales. Zynga had been valued at nearly 4.7 times its own by Take-Two, which had then agreed to offer a premium of 64% compared to the last stock market price. Microsoft, for its part, is about to pay a premium of 45% on the last quoted price of Activision.
In a new note published in response to this takeover soberly titled “a crazy thing”, Charles-Louis Planade notes that “the big maneuvers are continuing” and wonders about the fact that Ubisoft could be “the next on the list “. “On the transaction multiples reflected by the transaction, Ubisoft would be valued at 15 billion euros, or 121 euros per share, close to our price target naturally maintained at 119 euros”.
The expert further observed in an earlier note that “the list of declared leadership candidates have only one thing in common: they are all tech giants with names like Google, Amazon, Microsoft, Netflix or Tencent.” That of potential targets is rapidly shrinking on the other side, and given the very significant financial strength of possible buyers, it cannot be ruled out that the latest independent studios are trading with even higher premiums. In addition to Ubisoft, the Polish publisher CD Projekt in particular at the origin of the saga The Witcher gains 3.5%.
Quentin Soubranne – ©2022 BFM Bourse
Are you following this action?
Receive all the information about UBISOFT ENTERTAIN in real time: