Electronic Arts Sells Ubisoft Shares, Ends 6-Year Link

First Published Friday, 16th July 2010 05:02 pm - © 2010 Dow Jones


(Adds detail, comment.)

By Ambroise Ecorcheville and Angeline Benoit

Of Dow Jones NEWSWIRES

PARIS -(Dow Jones)- U.S.-based video-game developer Electronic Arts Inc. (ERTS) has sold its 14.8% stake in its French counterpart Ubisoft Entertainment SA (UBI.FR) for an undisclosed sum to investors it didn't identify, ending a tenuous six-year relationship that began with French fears of a hostile takeover by the American group.

"Our strategic priorities have changed since our initial investment," Electronic Arts said in a statement. "More recently, the Ubisoft position has been viewed as a portfolio holding, rather than a strategic holding," the San Francisco-based company said.

Terms of the sale weren't disclosed. But Swiss banking giant UBS estimated the total value of the stock sold by Electronic Arts at a little under EUR95 million, based on an average EUR6.75 a share price.

Electronic Arts didn't disclosed to whom it sold its stake. But an analyst in Paris said the shares had been sold to institutional investors. In fiscal 2010, EA had 27 game titles that sold more than 1 million copies, with five titles each selling more than 4 million copies - including FIFA 10, Madden NFL 10, Need for Speed SHIFT, The SIMS 3 and Battlefield: Bad Company 2.

Ubisoft produces the blockbuster game Assassin's Creed, as well as others such as Just Dance, Prince of Persia, Rayman, Tom Clancy's Splinter Cell and Driver, among others. The French company has been shifting its product offerings toward its main franchises and games for consoles like Microsoft Corp's XBox360 and Sony Corp's PS3. In the past the company had been more active in casual games.

Electronic Arts initially bought 19.8% of the capital in Ubisoft in 2004 at around EUR5 a share, according to an Exane BNP Paribas estimate. Since that time, there has been persistent speculation about whether Electronic Arts would go a step further and attempt to buy all of Ubisoft, or give up and dispose of its stake. It appears to have opted for the latter.

"This is good news for Ubisoft, which regains its independence, although Electronic Arts has always supported our strategy," a Ubisoft spokesman told Dow Jones Newswires.

The Guillemot family, which founded Ubisoft, holds 11.26% of the company and 20% of the voting rights. It remains the power to be reckoned with among shareholders. Ubisoft's chief executive officer is Yves Guillemot, making Ubisoft still more or less a family affair.

Ubisoft shares ended trading Friday on the Euronext paris exchange at EUR0.12 a share higher, or +1.7%, at EUR7.09, outperforming the SBF120 index, which was down 2.28%.

-Ambroise Ecorcheville and Angeline Benoit, Dow Jones Newswires; +33 (0)1 40 17 17 71; ambroise.ecorcheville@dowjones.com

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