Ubisoft shares tumble as Tencent deal seen dampening buyout prospects

By Diana Mandia

PARIS -Shares in Ubisoft Leisure tumbled on Wednesday after it introduced a deal that sees China’s Tencent Holdings elevate its stake within the firm, a transfer which analysts say dampens the prospect of a full sale of the French recreation maker.

The take care of Tencent Holdings values the maker of “Murderer’s Creed” and “Tom Clancy’s” online game franchises, at $10 billion, or round 80 euros per share, nicely above Tuesday’s inventory value closing stage of 43.5 euros.

It makes Tencent Ubisoft’s single largest shareholder with an general stake of 11%, which will be additional elevated to as a lot as 17%.

The deal, which comes scorching on the heels of the acquisition by NetEase of unlisted French video video games maker Quantic Dream, highlights a wave of consolidation within the sector, with tech giants snapping up unbiased gamers.

It additionally caps a tough four-year interval at Ubisoft, marked by a succession of delays of recent video video games and allegations of sexual harassment that led to a revamp of its high administration.

Ubisoft has lengthy been seen as a takeover goal, though the founding Guillemot household managed to beat off a raid by media group Vivendi in 2015.

Merchants and analysts mentioned the Tencent deal was optimistic for the French firm however eliminated the speculative enchantment of Ubisoft shares.

“The prospects of a takeover and a struggle for Ubisoft are gone as Tencent is now actually (there),” mentioned MidCap’s analyst Charles-Louis Planade.

A London dealer mentioned Ubisoft shares have been down on “disappointment that it will not be a takeover goal as Tencent has elevated (its) stake.”

The transaction makes Tencent a part of a shareholder pact with the Guillemot household. The deal includes Tencent’s acquisition of 49.9% of Guillemot Brothers Restricted – the holding firm that owns the majority of household’s 15% stake in Ubisoft – with simply 5% voting rights.

Tencent’s funding in Guillemot Brothers quantities to 300 million euros, Ubisoft mentioned in a satement on Tuesday night.

Tencent won't be able to promote its shares for 5 years, past which the Guillemot household may have a pre-emptive proper to purchase the shares. Ubisoft additionally mentioned Tencent pledged to not enhance its direct stake within the French video games maker past 9.99% for a interval of eight years.