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Gaming fail leaves Ubisoft stuck on takeover shelf

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

LONDON (Reuters Breakingviews) - Video game maker Ubisoft Entertainment must be wondering how many lives it has left. Shares in the $7.9 billion Paris-listed developer of shoot-’em-ups such “Tom Clancy’s Rainbow Six” dropped 4% after it revealed a 17% year-on-year drop in quarterly revenue to 353 million euros on Tuesday. True, that was partly expected as gamers stepped away from their screens post-lockdown. And sales should recover given slated new releases linked to hot-selling franchises such as “Watch Dogs”. 

Still, with year-to-date share losses now totalling one-third investors may have deeper doubts about Chief Executive Yves Guillemot’s ability to tilt the company away from blockbuster titles and towards recurring subscriptions and free-to-play games. Ubisoft’s rich back catalogue of titles such as “Just Dance” would be valuable to a potential acquirer. And it’s cheap too: including net debt Ubisoft trades at around 15 times forward operating profit, a steep discount to U.S. rivals Electronic Arts and Activision Blizzard on 34 and 22 times respectively, according to Refinitiv data. Like the protagonist in his “Assassin’s Creed” title, Guillemot must tread carefully. (By Christopher Thompson)

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(Editing by Neil Unmack and Oliver Taslic)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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