ValueAct Takes Interest in Nintendo with a Stake of Over $1 Billion

UTC by Christopher Hamman · 3 min read
ValueAct Takes Interest in Nintendo with a Stake of Over $1 Billion
Photo: Pixabay

Activist investor ValueAct Capital Partners believes that Nintendo could become a digital entertainment giant and has managed to take a stake of over $1B in the company.

Activist venture capital firm ValueAct Capital Partners has indicated an interest in Nintendo. The venture capital firm expressed this in a letter. Sources say that ValueAct has a stake of about $1 billion in the video game maker. This was indicated in a letter obtained by prominent newsmaker Reuters.

ValueAct according to the letter is looking towards digital channels and innovation to grow Nintendo. The activist firm started buying stock about a year ago. The general decline in the stock market gave ValueAct an opportunity to increase its stake.

ValueAct Believes in Nintendo

ValueAct believes that Nintendo can offer more to the world. The video game firm has been a household name, especially for Millenials. Characters such as Super Mario and his sidekick Luigi, Donkey Kong, and the different kinds of Pokemon are all fond memories of this age group.

The venture capital firm also believes that there are more opportunities in software development. Nintendo in their eyes could also become an entertainment company.

2.6 million shares or about 2% of the company was picked up by ValueAct. The markets rose by almost 2% on the news. A Nintendo spokesman said:

“We are aware that ValueAct is holding a stake and we’ve been engaged in dialogue with them. We don’t disclose content of our dialogue with our investors.”

This raises the prospects of a potential acquisition in the future. This comes at a time when the stay-at-home restrictions have pushed increased online activity.

As the lockdown situation continues, there is an increase in videogame sales. In the United States, for instance, videogame sales have risen to an all-time high. This rise is the first of its kind in a decade.

Nintendo’s “Animal Crossing: New Horizons” has been one of the top-selling video games so far.

Nintendo Has a Great Future

ValueAct may be onto something with its interest. Nintendo could become the next entertainment behemoth with the right strategies. ValueAct already is putting its mouth where its money is.

Nintendo already has an upcoming theme park and feature film as a test of this. Should all the pieces fall together, we may be looking at a rival to entertainment giants Netflix, Disney, and others.

ValueAct making such a bold statement is not new. The activist firm has done this before. This time, it appears optimistic. The firm said:

“We believe Nintendo will be one of the largest digital media services in the world, in a category with the likes of Netflix, Disney+, Tencent Interactive Entertainment and Apple Music.”

This places the investment firm as one of the critical forces that can drive Nintendo in the right direction. Nintendo like all the technology giants of its era faces challenges. These challenges are mostly challenges of adoption.

This move by ValueAct could be the key to bringing the videogame company that made the lives of Millenials memorable into the 21st century.

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