Ubisoft will land more widely in China, and China will land more widely in Ubisoft. According to a press release, the French video game studio has completed an operation with Tencent for the capital increase of the Beijing company, known for investing heavily in international video games. Fearful of a hostile takeover, Ubisoft therefore accepted the plan with Tencent, however setting its conditions. They will take 49.9% in the holding of the Guillemot brothers (founders of Ubisoft) but will not hold more than 9.99% of the studio (for a minimum of 8 years).
Ubisoft came close to being bought out (notably by Vivendi in 2018) when the difficulties are great in the sector, the financial markets are not kidding and competition has intensified. Choosing to let Tencent take a stake should allow it to better position itself on the Asian market and find some new money. In their conditions, the Guillemot brothers demanded that Tencent hold their Ubisoft shares for a minimum of 5 years. Then, the family holding company will have priority over the redemption of the shares.
A give-and-take contract
This operation marks a real upheaval for the company born in 1986 in Morbihan. From Montreuil today, where it still has its head office, Ubisoft controls its Parisian studios. At the dawn of the 2000s, it opened new premises in several major European cities, in the Maghreb, but also in Hong Kong. Tencent came into the capital five years ago and only held 4.5%. The Guillemot brothers owned 15.4% of the shares with their partners, and 21.4% of the voting rights. Now, with the arrival of Tencent, these shares increase to 19.8% and 24.9% respectively.
The new capital formation gives Ubisoft a little respite, which is preparing new games such as Assassin’s Creed, a new game derived from the film Avatar, and Skull & Bones. From an economic and financial point of view, Tencent paid a lot to acquire its new shares. Almost twice the price of the current Ubisoft course: 80 euros against 43 euros. An operation yet among the cheapest for Tencent in recent times. The Chinese has already paid $1.26 billion to acquire the Sumo Group studio. Tencent is also on the Fortnite file (and owns shares in Epic Games), and allowed Activision Blizzard to propel Call of Duty Mobile.
“The goal is always to cooperate on mobile games using Ubisoft’s intellectual property and to introduce Ubisoft’s main PC games to China”a manager at Ball Metaverse Research Partners told Bloomberg. “These popular global franchises could stand out in an increasingly saturated and mature Chinese online gaming market.” Above all, Tencent wants to be able to straighten out Ubisoft’s accounts by deploying AAA games on mobile. For many, with a share stuck at 9.99% for the next 8 years and no representation on the board, Ubisoft has locked in its deal with Tencent very well. “It’s too good to be true”commented some on Twitter.
