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French media conglomerate, Vivendi SA (EPA:VIV) decided to increase its hostile takeover bid for mobile games developer, Gameloft SE (EPA:GFT) by 20%.

Vivendi initially offered to acquire all of the shares of Gameloft that it does not yet own for €6.00 each. The media conglomerate is now offering €7.20 per share after the Board of Directors of the mobile games developer rejected its initial bid.

The new offer represents only 6% premium to the €6.79 per share closing price of Gameloft’s stock on Monday, February 29 in Paris. Investors have been acquiring Gameloft shares as they anticipate a bidding war.

Guillemot family rejected Vivendi’s initial offer

The Guillemot family, which owns more than 28% of the voting rights in Gameloft, issued a statement indicating that Vivendi’s initial proposal does not reflect the intrinsic valuation and prospects” of the mobile games developer.

The Guillemot family also a stake in Ubisoft Entertainment SA, the larger sister company of Gameloft. Michel Guillemot is the CEO of Gameloft while Yves Guillemot is the CEO of Ubisoft.

Gameloft also believes that Vivendi’s proposal lacks industrial logic because none of its businesses could bring attractive synergies. The mobile games developer also said the media conglomerate’s hostile takeover bid would have an adverse impact on Gameloft’s creative teams, staff, and management, which values its independence.

Vivendi CEO Vincent Bollore, a billionaire and activist investor, has been buying shares of Gameloft and Ubisoft without bothering to engage in discussion with the Guillemot brothers. Vivendi owns more than 30% of Gameloft and 15% of Ubisoft.

During an interview with Bloomberg News last year, Yves criticized Vivendi for showing “lack of respect for what Ubisoft is today and for all our shareholders.”

The Guillemot brothers previously stated that they would take the necessary steps to block a creeping takeover.

Gameloft has all the necessary assets to achieve growth

Neil Campling, an analyst at Aviate Global LLP commented that the Guillemot family needs to convince shareholders that they can improve the performance Gameloft and Ubisoft after rejecting Vivendi’s offer.

In a note to investors, Campling wrote, “To remain independent and get shareholder support, the companies need to deliver operational leverage and returns in the manner gold-standard industry leader Activision has. They need to, fast, to avoid Bollore being able to absorb the gaming companies into his mammoth media conglomerate.”

According to Gameloft, it “has all the necessary assets developed since its inception to deliver its industrial plan, which aims at taking advantage of the growth of the mobile video games industry and, in particular, the substantial growth of the programmatic mobile advertising market.”