Tencent buys into Ubisoft

Chinese tech and entertainment giant Tencent has acquired a 49.9% stake in Ubisoft’s holding company Guillemot Brothers Limited, as well as a 5% voting interest in the company.

Tencent previously already owned a 4.5% stake in Ubisoft itself and following the acquisition has much more control behind the scenes as the French publisher prepares its next big game announcements. As a result of the deal, Tencent’s stake in Ubisoft reportedly increased up to 9.99%.

Tencent buys in with €300 million

While this doesn’t mean Ubisoft has a new owner, it does change the mix of investments in the company and the relationship with the Guillemot family, who founded Ubisoft in the 80s. According to a report by Reuters, Chinese gaming giant Tencent has acquired a 49.9% stake in Guillemot Brothers Limited and a 5% voting interest in the company.

In purely mathematical terms, the investment in Guillemot Brothers Limited amounts to almost €300 million. The value per share derived from this number means that Tencent is significantly overpaying the Guillemot family based on Ubisoft’s current stock value. The move signals Tencent’s intent to make Ubisoft a key part of its international strategy and follows a pattern of major mergers and acquisitions in the video game industry in recent months.

For the Guillemot family, this step is seemingly a part of their strategy and their desire to retain full control of the company, which has been the subject of several takeover attempts in recent years. The official announcement of Tencent’s investment also included a statement from Ubisoft about “a long-term, unsecured loan to refinance the debt and provide additional funds that can be used to acquire shares in Ubisoft.”

A long-term partnership

While this move brings a massive cash inflow to Ubisoft and the Guillemot family, it also entrenches Tencent as an integral part of Ubisoft’s control of interests. However, any plans to move the shares further based on today’s news will have to wait.

According to Ubisoft’s statement, Tencent may not sell its Ubisoft shares for five years (and even then must give the Guillemot family priority in purchasing those shares should it decide to sell them) and may not hold its stake in Ubisoft in excess of 9, Increase beyond 99 percent.

This deal also marks the conclusion of a difficult four-year period at Ubisoft, which has seen a series of new game delays and allegations of sexual harassment, leading to a reshuffle of top management. The company’s share price has fallen from around €100 to less than €44 during this period.

Header: Tencent