Summary
Ubisoftand Tencent are considering launching an asset venture, according to a newly emerged report. The move, which would result inUbisoftessentially being broken apart, is understood to be one potential alternative to Tencent financing the struggling company’s private buyout.
The post-pandemic years haven’t been kind to Ubisoft, as the developer-publisher put out multiple big-budget games that underperformed commercially. This string of failures has resulted in its stock price dwindling over 80% since the start of the 2020s. A silver lining for any publicly traded entity finding itself in such a situation is that a low stock price makes going private much more feasible, i.e., cheaper. Sure enough,Ubisoft confirmed it was exploring “strategic options” for its futurein late 2024, when its share price was at a 12-year low. According to several reports that surfaced around that time, the group was primarily exploring the possibility of securing financing for its potential private buyout from Chinese entertainment giant Tencent, which is already a minority shareholder in Ubisoft.
Bloombergreportsthat Tencent and Ubisoft have now started considering an alternative plan, citing people familiar with their ongoing talks. The idea currently being discussed is said to be a joint venture that would incorporate only some of Ubisoft’s assets. Tencent would own a stake in this hypothetical spin-off, thereby boosting its share in Ubisoft, which currently sits at around 10%. No final decision on the matter has yet been made, with the discussions currently being at a stage whereTencent and Ubisoft’s Guillemot familyare evaluating which assets would be included in their hypothetical joint venture and what their overall valuation might be, as per the same source.
Ubisoft May Not Go Private If It Gets Broken Apart
Boosting Ubisoft’s valueis said to be Tencent’s main motivation for mulling this move. This would suggest that if the plan to break up Ubisoft were to be greenlit, it could preclude the possibility of the entire company going private—a scenario that gets more likely the lower the group’s stock falls.
The hypothetical asset venture would give Tencent more control over select Ubisoft properties, in addition to helping the company keep growing its video game business outside its home country. The joint operation could incorporate some of Ubisoft’s most valuable franchises, such asAssassin’s Creed—exactly the type of property that would appeal the most to a major investor like Tencent.
Ubisoft’s last standout hit wasAssassin’s Creed Valhalla, released in late 2020, which made over $1 billion in revenue. The next big-budget entry in the franchise has already been delayed twice in a bid to ensure it launches in the best possible state. Following the latest postponement,Assassin’s Creed Shadowsis now targeting a March 20 release, giving it 11 days to boost Ubisoft’s financials during the company’s ongoing fiscal year, which ends on March 31.
Ubisoft
Ubisoft is a well-known video game developer and publisher with a main headquarters in Saint-Mandé, France. Current CEO Yves Guillemot runs an array of teams responsible for some of the most iconic and well-known series in video games, with franchises like Assassin’s Creed, Farcry, The Crew, Just Dance, and more. Ubisoft also acts as a parent company for an array of other video game developers, including names like Massive Entertainment, Ubisoft Paris, Blue Mammoth Games, Red Storm Entertainment, and more.
