Tencent poured another small fortune into one of the biggest gaming companies. Ubisoft announced Tuesday that the Chinese conglomerate will increase its investment in assassins creed maker nearly $300 million through a complex set of financial maneuvers.
Specifically, rather than buying Ubisoft shares outright, Tencent is buying a 49.9 percent economic stake in Guillemot Brothers Limited, the primary investment vehicle through which the Ubisoft founders have managed their control of the French publisher over the years. This is in addition to the 4.5 percent stake it already had in Ubisoft. Tencent paid twice as much as the stock is currently worth to make it happen.
Although it now owns more Ubisoft than the Guillemot family, Tencent, which has been slowly buying parts from other studios and publishers across the video game industry, will only get 5 percent Voting Rights in Guillemot Brothers Limited. The message Ubisoft CEO Yves Guillemot and the other founders want to send is clear: This is not an acquisition.
Here are more details about the new arrangement:
- Tencent is buying a 49.9 percent stake in Guillemot Brothers Limited at $80 a share.
- Tencent will provide additional money to the Guillemot family to refinance their debts and acquire more shares in Ubisoft.
- Guillemot Brothers Limited will remain “exclusively under the control of the Guillemot family”.
- Tencent and the Guillemot family will now control up to 29.9 percent of Ubisoft.
- Tencent can now buy up to 9.99 percent of Ubisoft shares directly.
- Tencent cannot increase its stake for eight years, cannot sell its stock for five years, and will give the Guillemot family its first dicks if they sell it.
- Ubisoft’s leadership remains unchanged and Tencent will have no “operational veto”.
It was news of a potential deal with Tencent mentioned for the first time before Reuters Back in early August. Prior to that, there were reports of private equity firms being interested in the purchase potential in Ubisoft as well. This all comes on the heels of a major industry consolidation after Take-Two bought Zynga earlier this year and Microsoft tried to get regulatory approval to acquire Activision Blizzard.
But the Ubisoft website is still unique. The company faced a series of complaints in the workplace after an account of employee misconduct reports in the summer of 2020, and had trouble finding new success outside Doctrine killer Franchise amid ongoing production delays and mediocre releases. In the wake of another disappointing financial quarter, CEO Yves Guillemot also called on employees to cut expenses where possible in July.
Tencent wasn’t doing very well either. Tens of billions of value have evaporated During the past yearthousands of employees were laid off in favor of For the first time in nearly a decade due to lower revenue. At least part of the problem comes from the failure to obtain licenses to release new games in China. The company’s partnership with Ubisoft includes bringing PC versions of the publisher’s biggest franchises to China, as well as helping with the release of mobile mods.
However, the latest disruption hasn’t slowed Tencent’s ongoing gaming spending spree. In addition to the Ubisoft deal, it announced a file $260 million joint investment in elden ring FromSoftware maker with Sony just last week. This is against the backdrop of a host of other recent investments in small companies Such as life is strange Dontnode Maker.