Tencent has deposited another small fortune into one of the gaming's largest companies. Ubisoft announced on Tuesday that the Chinese giant would increase its investment in the maker of Assassins Creed by around $300 million through an elaborate set of financial maneuvers.
Tencent is buying a 49.9 percent economic share in Guillemot Brothers Limited, the principal investment vehicle through which Ubisofts founders have managed their share in the French publisher over the years. This is in addition to a 4.5 percent share already in Ubisoft.
Tencent, which has been slowly buying up chunks of other video game companies and publishers, will only have 5 percent voting rights within Guillemot Brothers Limited, according to Ubisoft CEO Yves Guillemot and the other founders. This isnt a buyout.
Here are a few more details on the new arrangement:
- Tencent buys 49.9 percent stake in Guillemot Brothers Limited at roughly $80 a share.
- Tencent will provide additional money for the Guillemot family to refinance its debt and to acquire more equity in Ubisoft.
- Guillemot Brothers Limited will remain exclusively controlled by 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 shares for five years, and will give the Guillemot family first dibs if it does sell.
- Ubisofts leadership remains unchanged and Tencent will not have any operational veto rights.
Track Health and FitnessThe improved, curved sensor gets closer to your skin, resulting in even more accurate wellness readings and you may improve sleep habits thanks to Advanced Sleep Coaching.
Back in August, Reuters reported that private equity was interested in buying Ubisoft. It all comes in the wake of significant industry consolidation, including Take-Two's acquisition of Zynga earlier this year and Microsoft's attempt to obtain regulatory clearance to buy Activision Blizzard.
Ubisofts position is unique. Following a probe into workplace misconduct in the summer of 2020, the company has struggled to find a new game outside of the Assassins Creed franchise owing to continual production delays and poor releases. In the wake of yet another disappointing financial quarter, CEO Yves Guillemot encouraged employees to reduce expenses wherever possible in July.
Tencent hasnt done too well either. Over the last year, the company has lost tens of billions in value, and it has laid off tens of thousands of employees for the first time in over a decade due to a lack of licenses to release new games in China. At least part of the problem stems from bringing PC versions of the publishers biggest franchises to China, as well as helping develop mobile adaptations.
Tencents' ongoing gaming spending spree hasn't been slowed by the recent turmoil. In addition to the Ubisoft acquisition, the company announced a $260 million joint investment in Elden Ring maker FromSoftware with Sony just last week. Thats on the back of a number of other recent investments in smaller businesses like Life is Strange maker Dontnod.