# China’s Tencent raises stake in ‘Assassin’s Creed’ maker Ubisoft Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-08 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Tencent Raises Stake in Ubisoft in $10 Billion Deal Meta Description: Tencent becomes Ubisoft's biggest shareholder with a 11% stake, increasing to 17%. Deal values the game developer at $10 billion, bolstering growth abroad. URL: https://financedigest.com/chinas-tencent-raises-stake-in-assassins-creed-maker-ubisoft-2html ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-07t193300z5lynxmpei850qsrtroptp4ubisoft-results-1736815258510-compressed.jpg) By Mathieu Rosemain, Tassilo Hummel and Julie Zhu PARIS/HONG KONG (Reuters) -Tencent Holdings Ltd is raising its stake in Ubisoft Entertainment SA in a deal that values France’s biggest games developer at about $10 billion, as deep-pocketed Chinese tech majors continue their overseas search for growth. Interest in Ubisoft comes as the world’s largest games firm by revenue counters slowing growth at home with purchases including 16.25% of Japan’s “Elden Ring” developer FromSoftware announced just a week ago – the same time domestic rival NetEase Inc said it would buy French games maker Quantic Dream. The latest deal makes Tencent Ubisoft’s single biggest [shareholder with an overall stake](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount") of 11%, which can be further increased to as much as 17%. It also values the [maker of the “Assassin’s Creed” and “Tom Clancy’s” video game](https://www.financedigest.com/ubisoft-shares-slump-20-after-french-video-game-maker-warns-on-revenue.html "Ubisoft shares slump 20% after French video game maker warns on revenue") franchises at $10 billion, or around 80 euros per share, well above Tuesday’s stock price closing level of 43.5 euros. The move also caps a difficult four-year period at Ubisoft, where there has been a succession of new game delays and sexual harassment allegations that led to a [revamp of top management](https://www.financedigest.com/britains-post-brexit-asset-management-revamp-eyes-liquidity-tokenisation.html "Britain’s post-Brexit asset management revamp eyes liquidity, tokenisation"). The [firm’s share price](https://www.financedigest.com/investors-warn-big-consumer-firms-over-price-hikes-as-competitors-gain.html "Investors warn big consumer firms over price hikes as competitors gain") has dropped in that time from about 100 euros to less than 44 euros on Tuesday. Tencent is a key shareholder partner for many of the industry’s leaders, who have created some of the most outstanding video games,” said Ubisoft [Chief Executive Officer](https://www.financedigest.com/iris-software-group-names-matt-tuson-as-chief-revenue-officer.html "IRIS Software Group names Matt Tuson as Chief Revenue Officer") Yves Guillemot. This transaction reinforces our ability to create strong value over the [coming years.”](https://www.financedigest.com/mild-sourness-products-is-expected-to-fuel-growth-of-sour-sugar-market-in-coming-years.html "Mild Sourness Products Is Expected To Fuel Growth Of Sour Sugar Market In Coming Years") The transaction also makes [Tencent part of a shareholder pact with Ubisoft’s](https://www.financedigest.com/chinas-tencent-raises-stake-in-assassins-creed-maker-ubisoft.html "China’s Tencent raises stake in ‘Assassin’s Creed’ maker Ubisoft") founding Guillemot family. The pact involves Tencent’s acquisition of 49.9% of Guillemot Brothers [Limited – the holding company](https://www.financedigest.com/why-it-pays-for-companies-to-hold-physical-assets-in-separate-limited-companies.html "Why it pays for companies to hold physical assets in separate limited companies") that owns the bulk of the family’s 15% stake in Ubisoft – with 5% voting rights, Ubisoft said in a statement on Tuesday evening. China’s largest social network and gaming firm, whose [investment in Guillemot Brothers amounts to 300 million euros](https://www.financedigest.com/germanys-merck-to-invest-300-million-euros-in-us-gas-plant.html "Germany’s Merck to invest 300 million euros in US gas plant") ($296 million), also has the right to raise its direct stake in Ubisoft to 9.99% from 4.5% currently, according to the statement. Reuters reported in early August, citing people with direct knowledge of the matter, that Tencent planned to [raise its Ubisoft stake](https://www.financedigest.com/kuehne-raises-lufthansa-stake-to-17-5-as-germany-sells-remaining-shares.html "Kuehne raises Lufthansa stake to 17.5% as Germany sells remaining shares") with the goal of becoming the single largest shareholder of the French company. Hong Kong-listed Tencent saw its shares close down 1% on Wednesday. Tencent will not be able to sell its shares for five years, beyond which the Guillemot family will have a pre-emptive right to [buy the shares](https://www.financedigest.com/uks-bellway-to-buy-back-shares-hike-social-housing-output.html "UK’s Bellway to buy back shares, hike social housing output"), Ubisoft said. It also said Tencent pledged not to increase its direct stake in the [French games maker beyond 9.99% in capital](https://www.financedigest.com/parisians-vote-to-ban-e-scooters-from-french-capital.html "Parisians vote to ban e-scooters from French capital") for a period of eight years. Tencent, which bought its first 5% of Ubisoft for 66 euros per share in 2018, is also [providing the Guillemot’s holding](https://www.financedigest.com/is-your-technology-provider-holding-you-back.html "Is your technology provider holding you back?") with a long-term loan to refinance its debt, Ubisoft said. The deal structure does not seem to be a [change to the long-standing strategic partnership between the two firms](https://www.financedigest.com/uk-watchdog-warns-crypto-firms-to-prepare-for-advertising-rule-change.html "UK watchdog warns crypto firms to prepare for advertising rule change"), said Matthew Kanterman, director of research at Ball Metaverse Research Partners. Overall it’s a bet by Tencent that Ubisoft can improve its execution and unlock [value in its catalogue of intellectual property](https://www.financedigest.com/how-a-garden-can-boost-your-property-value.html "How a garden can boost your property value") (IP), the pair can create new mobile games based on that IP and that they can bring existing Ubisoft titles into China once the regulatory climate improves,” he said. The deal will likely help Tencent offset [pressure in its home market where the gaming regulator](https://www.financedigest.com/analysis-u-s-regulators-could-be-pressured-by-slim-republican-house-control.html "Analysis-U.S. regulators could be pressured by slim Republican House control") has not granted any new game licences to Tencent since June last year, analysts said. Overall revenue in the [world’s biggest](https://www.financedigest.com/biggest-economy-in-the-world.html "Biggest Economy in the World") video game market declined for the first time in January-June, a report showed, as it continued to reel from increasing government oversight. China began intense scrutiny of its high-growth tech sector around two years ago, in part alarmed by what [regulators called “disorderly expansion of capital”](https://www.financedigest.com/austrian-regulator-orders-system-relevant-banks-to-up-capital-buffers.html "Austrian regulator orders system-relevant banks to up capital buffers") caused by acquisition sprees. Tencent last month reported its first ever [quarterly revenue fall](https://www.financedigest.com/logitech-quarterly-sales-fall-22-as-slowdown-fears-bite.html "Logitech quarterly sales fall 22% as slowdown fears bite"), partially hurt by a lack of game approvals and regulations that limit playing time. ($1 = 1.0122 euros) (Reporting by Tassilo Hummel, Mathieu Rosemain, Josh Ye and Julie Zhu; Editing by Leslie Adler, Christopher Cushing and Jonathan Oatis) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---