Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive-Tencent seeks bigger stake in 'Assassin's Creed' maker Ubisoft - sources

Stock Markets Aug 04, 2022 11:26PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A logo of Tencent is seen at its booth at the 2020 China International Fair for Trade in Services (CIFTIS) in Beijing, China September 4, 2020. REUTERS/Tingshu Wang 2/2

By Julie Zhu and Selena Li

HONG KONG (Reuters) - Tencent Holdings (OTC:TCEHY) Ltd plans to raise its stake in French video game group Ubisoft Entertainment SA as the Chinese gaming giant pivots to the global gaming market, four sources with direct knowledge of the matter told Reuters.

China's largest social network and gaming firm, which bought a 5% stake in Ubisoft in 2018, has reached out to the French firm's founding Guillemot family and expressed interest in increasing its stake in the firm, the sources said.

It is not clear how much more Tencent wants to own in Ubisoft, valued at $5.3 billion, but Tencent aims to become the single largest shareholder of the French company with an additional stake purchase, two of the sources said, speaking on condition of anonymity.

Tencent is hoping to buy a part of the additional stake in Ubisoft, the maker of the blockbuster "Assassin's Creed" video game franchise, from the Guillemot family, which owns 15% of the firm, three of the sources said.

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

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

Ubisoft shares closed up 11% on Thursday, after having risen as much as 21% earlier after the Reuters report in their biggest daily rise since 2004.

Shares in Guillemot Corp SA, the holding company in which the Guillemot family owns the majority shareholding, ended 7.3% higher.

Hong Kong-listed Tencent saw its shares drop 2% in morning trade on Friday while the Hang Seng Tech Index was flat.

(Graphic:Ubisoft shares set for biggest daily jump since 2004: https://graphics.reuters.com/TENCENT-INVESTMENT/dwpkrwdggvm/chart.png)

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

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

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

Tencent and Ubisoft declined to comment.

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

The planned stake purchase, Tencent's latest major 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 games market, the world's largest, has become fiercely competitive.

"Tencent is very determined to nail down the deal as Ubisoft is such an important strategic asset for Tencent," one of the people said.

At the top end of 100 euros per share, Tencent's offer will be a premium of 127% to the stock's 44 euros average price over the past three months, and is close to its historical price ceiling at 108 euros in 2018.

Tencent has submitted to the Guillemot family a term sheet - a non-binding offer describing the basic terms and conditions of an investment - with a price "way above" the company's current price to ward off potential competition, one of the sources said.

The aggressive offer comes as global gaming power houses have been rushing to snap up quality independent game makers in recent years, which are in scarcity, two of the sources said.

Tencent's senior executives flew to France in May to meet the Guillemot family about the purchase, two of the people said.

DOMESTIC PRESSURES

China's gaming regulator has not granted any new game licences to Tencent at home since June last year, before it froze gaming approvals for nearly nine months. Since it resumed approvals in April this year, none of the past four batches included the company.

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

Tencent, which has stakes in U.S. video game developers Epic Games and Riot Games, said in June it would release its flagship mobile game "Honor of Kings" globally by the end of the year.

In 2016, it bought a majority stake in "Clash of Clans" mobile game maker Supercell for roughly $8.6 billion, one of the world's biggest ever gaming deals.

It also owns 9% of UK video gaming firm Frontier Developments and said last year it would buy another British developer Sumo in a $1.3 billion deal.

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

($1 = 0.9819 euros)

Exclusive-Tencent seeks bigger stake in 'Assassin's Creed' maker Ubisoft - sources
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email