Exclusive: Tencent seeks bigger stake in ‘Assassin’s Creed’ maker Ubisoft – sources

HONG KONG, Aug 4 (Reuters) – Tencent Holdings Ltd (0700.HK) plans to lift its stake in French online game group Ubisoft Entertainment SA (UBIP.PA) because the Chinese gaming large pivots to the worldwide gaming market, 4 sources with direct data of the matter advised Reuters.

China’s largest social community and gaming agency, which purchased a 5% stake in Ubisoft in 2018, has reached out to the French agency’s founding Guillemot household and expressed curiosity in rising its stake in the agency, the sources mentioned.

It shouldn’t be clear how far more Tencent needs to personal in Ubisoft, valued at $5.3 billion, however Tencent goals to change into the only largest shareholder of the French firm with a further stake buy, two of the sources mentioned, talking on situation of anonymity.

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Tencent is hoping to purchase part of the extra stake in Ubisoft, the maker of the blockbuster “Assassin’s Creed” online game franchise, from the Guillemot household, which owns 15% of the agency, three of the sources mentioned.

Tencent may supply as much as 100 euros ($101.84) per share to amass the extra stake, two of the sources with data of the inner discussions mentioned. It paid 66 euros per share for the 5% stake in 2018.

Details of the deal usually are not but finalized and are topic to alter, the sources mentioned.

Ubisoft shares surged 21% after the Reuters report at 1008 GMT and had been set for his or her largest day by day rise since 2004.

Shares in Guillemot Corp SA (GTCN.PA), the holding firm in which the Guillemot household owns the bulk shareholding, had been buying and selling up 10.3% at 14.14 euros per share at 1240 GMT and had been set for his or her largest day by day soar since January.

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Tencent may also search to amass shares from public shareholders of Ubisoft, two of the sources mentioned, in a bid to spice up its possession and change into the only-largest shareholder.

About 80% of the French agency’s shares are owned by public shareholders, in response to its newest annual report.

All the sources declined to be named as they don’t seem to be licensed to talk to the media.

Tencent and Ubisoft declined to remark.

Representatives of the Guillemot household couldn’t be instantly reached for remark.

The deliberate stake buy, Tencent’s newest main overseas deal since a regulatory crackdown in late 2020, will assist it offset a few of the pressures in the home gaming market. China’s video video games market, the world’s largest, has change into fiercely aggressive.

“Tencent may be very decided to nail down the deal as Ubisoft is such an essential strategic asset for Tencent,” one of many individuals mentioned.

At the highest finish of 100 euros per share, Tencent’s supply might be a premium of 127% to the inventory’s 44 euros common value over the previous three months, and is near its historic value ceiling at 108 euros in 2018.

Tencent has submitted to the Guillemot household a time period sheet – a non-binding supply describing the essential phrases and situations of an funding – with a value “method above” the corporate’s present value to keep at bay potential competitors, one of many sources mentioned.

The aggressive supply comes as international gaming energy homes have been dashing to snap up high quality impartial sport makers in current years, that are in shortage, two of the sources mentioned.

Tencent’s senior executives flew to France in May to fulfill the Guillemot household concerning the buy, two of the individuals mentioned.

DOMESTIC PRESSURES

China’s gaming regulator has not granted any new sport licenses to Tencent at residence since June final yr, earlier than it froze gaming approvals for almost 9 months. Since it resumed approvals in April this yr, not one of the previous 4 batches included the corporate. learn extra

In May, Tencent reported that its home sport income dropped 1% in the primary quarter whereas worldwide sport income rose 4%.

Tencent, which has stakes in US online game builders Epic Games and Riot Games, mentioned in June it might launch its flagship cellular sport “Honor of Kings” globally by the top of the yr. learn extra

In 2016, it purchased a majority stake in “Clash of Clans” cellular sport maker Supercell for roughly $8.6 billion, one of many world’s largest ever gaming offers.

It additionally owns 9% of UK video gaming agency Frontier Developments and mentioned final yr it might purchase one other British developer Sumo in a $1.3 billion deal. learn extra

Ubisoft, whose titles additionally embrace “Prince of Persia” and “Rainbow Six”, in May forecast decrease working revenue for 2022-23 after the corporate reported working revenue for 2021-22 that missed estimates. learn extra

($1 = 0.9819 euros)

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Additional reporting by Pamela Barbaglia in London, Sudip Kar-Gupta and Richard Lough in Paris; modifying by Sumeet Chatterjee, Jason Neely and David Evans

Our Standards: The Thomson Reuters Trust Principles.

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