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EXCLUSIVE Tencent Seeks Bigger Stake In ‘Assassin’s Creed’ Maker Ubisoft: Sources

EXCLUSIVE Tencent Seeks Bigger Stake In 'Assassin's Creed' Maker Ubisoft: Sources
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HONG KONG, Aug 4 (Reuters) – Tencent Holdings Ltd (0700.HK) plans to increase its stake in the French video game group Ubisoft Entertainment SA (UBIP.PA) as the Chinese gaming giant pivots to the global gaming market, four sources with direct knowledge of the matter told Reuters.

China’s largest gaming and social media firm, which bought a 5% stake in Ubisoft in 2018, has approached the Guillemot family, founders of the French firm, and expressed interest in increasing its stake in the firm, the companies said. sources.

It’s unclear how much more Tencent wants to own in Ubisoft, valued at $5.3 billion, but Tencent aims to become the French company’s largest single shareholder with an additional stake purchase, two of the sources said, speaking on condition of anonymity.

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Tencent hopes to buy an additional stake in Ubisoft, the maker of the hit “Assassin’s Creed” video game franchise, from the Guillemot family, which owns 15% of the company, three of the sources said.

Tencent could offer up to 100 euros ($101.84) per share to acquire the additional stake, two of the sources with knowledge of the internal discussions said. He paid 66 euros per share for the 5% stake in 2018.

Details of the deal are not yet finalized and are subject to change, the sources said.

Ubisoft shares rose 21% after the Reuters report at 1008 GMT and were on track for their biggest daily gain since 2004.

Shares in Guillemot Corp S.A. (GTCN.PA)the holding company in which the Guillemot family owns the majority of shares, was up 10.3% by 1240 GMT and set for its biggest daily jump since January.

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Tencent will also seek to acquire shares from Ubisoft’s public shareholders, two of the sources said, in a bid to increase its ownership and become the largest single shareholder.

Around 80% of the French firm’s shares are owned by public shareholders, according to its latest annual report.

All sources declined to be named as they are not authorized to speak to the media.

Tencent and Ubisoft declined to comment.

Representatives for the Guillemot family could not be immediately reached for comment.

The planned stake purchase, Tencent’s last big foreign deal since a regulatory crackdown in late 2020, will help it offset some of the pressures in the domestic gaming market. China’s video game market, the world’s largest, has become fiercely competitive.

“Tencent is very determined to get the deal done as Ubisoft is such an important strategic asset for Tencent,” one of the people said.

At the high end of €100 per share, Tencent’s offer will be a 127% premium to the average share price of €44 over the past three months, and is close to its all-time high price of €108 in 2018.

Tencent presented the Guillemot family with a term sheet, a non-binding offer outlining the basic terms and conditions of an investment, priced “well above” the company’s current price to avoid potential competition, one of the sources said. .

The aggressive bidding comes as global gaming powerhouses have scrambled to snap up quality independent game creators in recent years, which are in short supply, two of the sources said.

Top Tencent executives flew to France in May to meet with the Guillemot family about the purchase, two of the people said.

DOMESTIC PRESSURES

China’s gaming regulator has not granted any new game licenses to Tencent at home since June last year, before freezing game approvals for nearly nine months. Since it resumed approvals in April this year, none of the last four batches have included the company. read more

In May, Tencent reported that its domestic game revenue fell 1% in the first quarter, while international game revenue rose 4%.

Tencent, which has stakes in US video game developers Epic Games and Riot Games, said in June that it would launch its flagship mobile game “Honor of Kings” globally by the end of the year. read more

In 2016, he bought a majority stake in “Clash of Clans” mobile game maker Supercell for approximately $8.6 billion, one of the largest gaming deals in the world.

It also owns 9% of UK video game firm Frontier Developments and said last year it would buy another UK developer, Sumo, in a $1.3bn deal. read more

Ubisoft, whose titles also include “Prince of Persia” and “Rainbow Six,” in May forecast a lower operating profit for 2022-23 after the company reported operating income for 2021-22 that missed estimates. read more

($1 = 0.9819 euros)

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Additional reporting by Pamela Barbaglia in London, Sudip Kar-Gupta and Richard Lough in Paris; edited by Sumeet Chatterjee, Jason Neely and David Evans

Our standards: The Thomson Reuters Trust Principles.

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