China’s largest social network and gaming company, which bought a 5 percent stake in Ubisoft in 2018, has contacted the founding family of French company Guillemot and expressed interest in increasing its stake in the company, the sources said. It is not clear how much more Tencent wants to own Ubisoft, which is valued at $5.3 billion, but Tencent aims to become the French company’s largest shareholder with an additional stock purchase, two of the sources said, speaking on condition of anonymity. . Sign up now for FREE unlimited access to Reuters.com Register Tencent hopes to buy some of the additional stake in Ubisoft, maker of the “Assassin’s Creed” video game franchise, from the Guillemot family, which owns 15 percent 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. In 2018 it paid 66 euros per share for the 5% stake. Details of the deal have not yet been finalized and are subject to change, the sources said. Ubisoft shares jumped 21 percent after the Reuters report at 1008 GMT and were set for their biggest one-day gain since 2004. Shares in Guillemot Corp SA ( GTCN.PA ), the holding company in which the Guillemot family owns a majority stake, were trading up 10.3 percent at 12:40 GMT, their biggest daily jump since January. Reuters Graphics Tencent will also seek to acquire shares from Ubisoft’s public shareholders, two of the sources said, in a bid to strengthen its ownership and become the single largest shareholder. About 80% of the French company’s shares are owned by public shareholders, according to its latest annual report. All the 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 immediately be reached for comment. The planned stake purchase, Tencent’s last major overseas deal after a regulatory crackdown in late 2020, will help it offset some of the pressures in its domestic gaming market. China’s video game market, the largest in the world, has become fiercely competitive. “Tencent is very determined to close the deal as Ubisoft is such an important strategic asset for Tencent,” one of the people said. At the top of 100 euros per share, Tencent’s offer would be a 127% premium to the stock’s average price of 44 euros over the past three months and is close to its all-time high of 108 euros in 2018. Tencent submitted to the Guillemot family a term sheet – a non-binding offer outlining the key terms and conditions of an investment – priced “well above” the company’s current price to fend off potential competition, one of the sources said. The aggressive bid comes as global gaming companies rush to buy quality independent game makers in recent years, which have been in short supply, two of the sources said. Senior Tencent executives flew to France in May to meet with the Guillemot family about the purchase, two of the people said.
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China’s gaming regulator has not granted new gaming licenses to Tencent at home since June last year, before freezing gaming approvals for nearly nine months. Since it resumed approvals in April this year, none of the last four batches included the company. read more In May, Tencent reported that domestic game revenue fell 1 percent in the first quarter, while international game revenue rose 4 percent. Tencent, which owns stakes in US video game developers Epic Games and Riot Games, said in June that it would release its flagship mobile game “Honor of Kings” worldwide by the end of the year. read more In 2016, it bought a majority stake in “Clash of Clans” mobile game maker Supercell for about $8.6 billion, one of the biggest gaming deals in the world. It also owns 9 percent of British video game company Frontier Developments and said last year it would buy another British developer Sumo in a $1.3 billion deal. read more 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. read more ($1 = 0.9819 euros) Sign up now for FREE unlimited access to Reuters.com Register 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.
