Chinese Tech Giant, Tencent Teams Up with Guillemots in Ubisoft Buyout Plan
Tencent Holdings is teaming up with the Guillemot family, which owns Ubisoft Entertainment, to form a new venture. According to Yahoo Finance, the Tencent Ubisoft buyout will see the new entity take up some assets that are currently owned by Ubisoft to boost its value.
A Strategic Deal
Sources close to the two companies said the Guillemont family association and Tencents, a Chinese tech firm are currently evaluating Ubisoft assets to determine their valuation and decide which ones to include in the new entity.
The buyout deal is very strategic for Tencent. Should the deal succeed, the gaming and social media platform will own a stake in the new venture, which will expand its control over some intellectual properties in Ubisoft. This will enable the Chinese tech giant to boost its video gaming business outside China.
Deliberations are ongoing and no final decisions have been made, the people said. A representative for Tencent declined to comment. A spokesperson for Ubisoft referred to the company’s Jan. 9 announcement, when it said it had appointed advisors to review and pursue various options to boost value, declining to comment until that process has been completed.
Stabilizing Ubisoft
Tencent and the Guillemot family were reportedly talking to advisors on strategies for stabilizing Ubisoft and boosting its stocks that had plummeted. Ubisoft’s market value has dropped significantly due to a drop in share prices. The stock plunge was triggered by a delay in the release of several games, including Star Wars Outlaws and Assassin’s Creed Shadows. For instance, the company pushed the launch of Assassin’s Creed Shadows from November 2024 to February 2025.
Investors have also expressed concerns over the company’s financial performance and game quality which have made it challenging for it to remain competitive. Sources close to the company say a Ubisoft buyout was among the options under consideration. As of March 2024, the Guillemot family and Tencent owned 25.4% of the French video game publisher’s share capital and held 29.6% of voting rights in the company.
The Biden administration has included Tencent on the list of firms that are working with the Chinese army or making a significant contribution to the country’s industrial base. Although companies on this list do not attract any specific sanctions, the US government discourages American firms from engaging such companies.
Market Performance
News of the buyout triggered a Ubisoft share surge on Wednesday, January 15. Shares of the video game company rose by 4.3%, the largest intraday rise in close to three weeks. Over the last year, Ubisoft stocks have lost an estimated 47% of their value, placing the company’s market valuation at $1.6 billion. Last September, Ubisoft reduced its sales outlook and announced a delay in the debut of the Assassin’s Creed Shadows. The company pushed the launch of this game a second time to March 20, 2025, last week.
On the contrary, Tencent profit margins have been surging. In November 2024, the company reported that its quarter profits grew by 47% to reach $7.37 billion, surpassing the LSEG $6.39 billion estimates for the period. The Chinese gaming and social media company attributed this performance to growth in advertising, games, and cloud services.
Tencent owns WeChat Pay, one of the large mobile payment apps in China. The company reported an 8% increase in annual revenues to reach 167.2 billion yuan, up from 154.6 billion in quarter three. This increase is largely within analyst forecasts of 167.9 billion yuan. The company expects to generate significant cash flow over the next year through share buybacks and dividends.
