Assassin's Creed maker Ubisoft plunges 16% after Chinese giant Tencent ups stake

Shares of games developer Ubisoft plunged much than 16% connected Wednesday aft prospects of a afloat takeover were dampened pursuing a determination by Chinese tech elephantine Tencent to summation its involvement successful the company.

On Tuesday, the 2 companies announced that Tencent invested 300 cardinal euros ($296.9 million) successful Guillemot Brothers Limited, amounting to a 49.9% involvement successful the company. Tencent lone gets 5% voting rights successful the company.

Guillemot Brothers Limited is controlled by the Guillemot family, and is the entity that controls the bulk of the family's astir 15% involvement successful Ubisoft.

The Guillemot brothers founded Ubisoft successful 1986 and person fought hard to support the institution autarkic and protected from a takeover.

Tencent's concern values Ubisoft shares astatine 80 euros each, an 83% premium connected Tuesday's closing terms and gives it an indirect involvement successful the French games developer.

The determination efficaciously closes the doorway connected a afloat takeover of Ubisoft by immoderate party, according to analysts, thing that investors were holding retired for.

"What this transaction does look to awesome is that immoderate afloat merchantability of Ubisoft to a strategical oregon fiscal purchaser is precise unlikely. In our presumption this should beryllium seen arsenic a nett antagonistic for shares (though not for the institution itself)," analysts astatine Cowen said successful a enactment Tuesday.

As portion of the deal, Tencent is capable to summation its nonstop involvement successful Ubisoft from 4.5% presently to 9.99% of the superior oregon voting rights. But Tencent volition not beryllium capable to merchantability its shares for 5 years and volition not beryllium capable to summation its involvement successful Ubisoft beyond 9.99% for a play of 8 years. That efficaciously rules retired a implicit takeover of the gaming firm.

Ubisoft's play began successful 2015 erstwhile French media conglomerate Vivendi took a involvement successful the European gaming firm, yet becoming its biggest shareholder. But the Guillemot household were determined to support the institution independent.

In 2018, aft a three-year battle, Vivendi dropped its pursuit of Ubisoft. Tencent stepped successful to bargain immoderate of the Ubisoft shares Vivendi offloaded and the Chinese tech elephantine ended up owning a 5% involvement successful the games company.

Ubisoft has faced a fig of challenges including intersexual harassment allegations and a deficiency of caller deed titles.

Tencent's concern continues a flurry of deals successful the video games abstraction this year, peculiarly from Asian firms, that began with Microsoft's projected $68.7 cardinal acquisition of Activision Blizzard successful January followed by Sony's takeover of Bungie, the shaper of deed games Halo and Destiny.

Tencent, based successful Shenzhen, China, has grown into 1 of the world's largest gaming companies implicit the years, done acquisitions of and investments successful smaller studios with fashionable planetary titles including League of Legends shaper Riot Games, for example.

Tougher regularisation astir gaming successful China has pushed Tencent and its rival NetEase to expand overseas done investments and acquisitions.

Ubisoft is known for immoderate fashionable franchises including Assassin's Creed and Rainbow Six. Ubisoft scheduled an lawsuit for Saturday to uncover details astir upcoming games.

Tencent has typically helped companies it has invested successful to tally independently, but offered a manus to grow titles into China and onto mobile, wherever it has typically been strong.

Martin Lau, president of Tencent, said that the 2 companies volition proceed "to make immersive crippled experiences" and bring Ubisoft's astir well-known franchises to mobile.