Tencent to Raise Its Stake in Ubisoft, Aims to Become Largest Shareholder

Tencent

Reuters reports today that Tencent is determined to raise its current 5% stake in French game developer and publisher Ubisoft, intending to eventually become the single largest shareholder of the whole company.

A part of the stake purchased would be grabbed directly from the Guillemot family, which currently holds 15% of Ubisoft. Reuters says that Tencent representatives flew to France in May to meet the Guillemots, offering them a non-binding offer describing the investment's basic terms and conditions. The pricing is extremely attractive for the Guillemots, offering roughly €100 per stake with a premium of 127% over the average €44 Ubisoft stock traded in the last few months.

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Needless to say, this sent Ubisoft shares up +15% (€48), and even Guillemot Corp SA, Guillemots' holding company, is trading at +8,58% right now (€13,92).

Given the less than ideal domestic situation in China (the publisher has not received new game licenses from the Chinese government in over a year), Tencent has increasingly invested in Western game companies. Tencent already owns Funcom, Leyou, Riot Games, Sharkmob, Sumo, Turtle Rock Studios, Wake Up Interactive, Inflexion Games, Grinding Gear Games, Fatshark, Klei Entertainment, 10 Chambers Collective, Stunlock Studios, and Yager Interactive. It also holds minority stakes and/or strategic investments in Epic Games, Garena, Dontnod, Bloober, Marvelous, Netmarble, Kakao, Bluehole, Frontier, Kadokawa Corporation, Activision Blizzard, Paradox Interactive, Remedy, Playtonic, and PlatinumGames.

For its part, Ubisoft (currently valued at around $5.3 billion) has been in the rumor mill as the potential target for the next big acquisition in the games industry after the likes of Microsoft/Activision Blizzard, Take-Two/Zynga, and Sony/Bungie. The renowned publisher has faced some tough times following delays, cancellations, and increasing costs.

Most recently, during the latest quarterly financials, Ubisoft reported a 10% decreased revenue on a year-over-year basis and announced the cancellation of Splinter Cell VR, Ghost Recon: Frontline, and two unannounced projects. It also delayed an unannounced premium game, believed to be Assassin's Creed Rift, to 2023.

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