Tencent Holdings and the Guillemot family, founders of Ubisoft Entertainment SA, are considering options, including a potential buyout of the French video game developer after it lost more than half its market value this year, according to people familiar with the matter.
The Chinese technology company and Guillemot Brothers have been talking to advisers to help explore ways to stabilize Ubisoft and boost its value, said the people, who asked not to be identified discussing the private matter. One possibility being discussed would be a merger to take the company private, the people said.
Shares in Ubisoft jumped 33 percent in Paris on Friday after the Bloomberg News report, the steepest rise since the company’s 1996 initial public offering (IPO).
Ubisoft shares have fallen about 40 percent this year, giving the company a market capitalization of around €1.8 billion (roughly Rs. 16,577 crore). According to the company’s latest annual report, Tencent owned 9.2 percent of Ubisoft’s net voting rights at the end of April, while the Guillemot family owned about 20.5 percent.
Some minority shareholders, including AJ Investments, have pushed for either private equity or a sale of Ubisoft to a strategic investor amid falling stock prices. These are at an early stage and there is no certainty that they will result in a transaction. Tencent and the Guillemot family are also considering other alternatives, the people said.
Spokesmen for Ubisoft and the Guillemot family declined to comment. A Tencent representative could not be reached for comment during the holiday week in China.
Ubisoft shares fell to their lowest level in more than a decade last month after the company cut its forecast due to weaker-than-expected sales and the delay of the highly anticipated Assassin’s Creed Shadows game. The video game firm has struggled over the past few years to recover from a pandemic-era production slump that has led to delays in new game releases and game cancellations.
Several private equity firms, including Blackstone Inc. and KKR & Co., were exploring potential bids for Ubisoft in 2022 amid a series of big deals in the video game industry, Bloomberg News reported at the time. Later that year, the founding family partnered with Tencent, which acquired 49.9% of the holding company Guillemot Brothers in addition to a direct stake in Ubisoft.
Analysts saw the deal as a way to keep suitors at bay, allowing the brothers to retain control of Ubisoft’s management, with Tencent’s stake capped below 10 percent without veto rights. Under the deal, Tencent also couldn’t sell its shares to Ubisoft for five years, after which the Guillemot family has a right of first refusal. The deal still allows the brothers to communicate and work with anyone, Ubisoft Chairman and Chief Executive Officer Yves Guillaume said in an interview last year.
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