Image: Ubisoft
It looks like Tencent is doubling down on its investment in Ubisoft. Although it already owns 5 percent of the Assassin’s Creed publisher, Reuters now reports that the Chinese mega-conglomerate with heavy investments across the gaming industry has its sights set on becoming the largest shareholder in Ubisoft. His plan to achieve this? Pay double what the stock is worth and buy a share directly from the Guillemot family.
“Tencent is very determined to finalize the deal as Ubisoft is such an important strategic asset for Tencent,” a source told Reuters. Tencent and Ubisoft have already partnered to bring the latter’s games to China, and the aim of this new deal would be to help Tencent aim to bring its games to a global audience. It’s also been over a year since the company received a new license to launch a game in China.
Kotaku previously reported that sources suggested Ubisoft CEO Yves Guillemot was looking for an exit ramp amid the company’s recent turmoil and exits. Some longtime colleagues have left or been forced to resign, and Guillemot’s own son Charlie moved on last year to co-found fantasy sports startup NFT. Such an agreement would go one way to ease the transition.
To make it happen, Reuters reports that Tencent is willing to pay up to nearly $104 per share, more than double what Ubisoft’s stock is currently worth. Some of those shares would come directly from the Guillemot family, which founded Ubisoft in 1986 and currently owns roughly 15 percent of it. Others would come from the rest of the public which has about 80 percent. Tencent already owns 5 percent of the company, but would need to increase that stake substantially to overtake the Guillemot family as sole shareholder.
Tencent’s current 5 percent stake came as part of a 2018 deal in which it helped the publisher fend off a hostile takeover attempt by French media conglomerate Vivendi. At the time, Tencent was prohibited from increasing its ownership. That limitation expired earlier this year, however. Reuters reports that Tencent executives visited the Guillemot family in May to outline what a potential deal would look like. Bloomberg previously reported in April that private equity firms were also interested in Ubisoft, which helped boost the stock price at the time.
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All of these moves come in the wake of a frenzy of mergers and acquisitions in the video game space. Microsoft proposed to buy Activision Blizzard for $69 billion in January. Sony bought Destiny 2 maker Bungie for over $3.6 billion shortly after. And Take-Two bought Zynga for $12.7 billion.
The free-for-all consolidation has left many wondering who will be next, and Ubisoft was the prime suspect. It has a deep catalog of major franchises, including Assassin’s Creed, Far Cry, and Rainbow Six, but lately it’s also been struggling to deliver on some of them. Delays, glitches, and the turnover of many senior teams have left Ubisoft with a relatively anemic pipeline of projects for the coming year. And because of global market conditions, Yves Guillemot recently encouraged staff in an email to cut expenses wherever possible.
Tencent has also faced problems recently, particularly in the domestic Chinese market, where regulatory hurdles stalled new launches. The conglomerate lost tens of billions in the process, with the freeze on new approvals only beginning to unfreeze earlier this year, though not for Tencent.
Ubisoft would be far from Tencent’s only major investment in the global gaming space. In addition to its own studios in North America and elsewhere, the conglomerate has continued to snap up smaller studios even faster than competitors like Microsoft and Embracer Group. For now, though, it’s still only the second-largest gaming company in the world behind Sony.