Tencent hopes to expand its ownership of Ubisoft with the long-term goal of becoming the company’s largest shareholder.
Chinese game company Tencent has made headlines in the gaming industry over the past few years with its aggressive expansion into the international market. It has acquired shares of several game developers and publishers in both the United States and Europe, including a 5% stake in Assassin’s Creed and Skull and Bones publisher Ubisoft.
However, it seems that Tencent is no longer satisfied with its small piece of cake in this French conglomerate. The Chinese gaming giant is reportedly hoping to increase its ownership of Ubisoft with the long-term goal of becoming the company’s largest shareholder.
According to Reuters, four unnamed sources recently reported that the deal is underway. According to them, Tencent is in talks with Ubisoft’s founding Guillemot family, who own a 15% stake in the company. Tencent is expected to offer 100 euros (2 million 400 thousand dong) per share, more than 66 euros (1 million 500 thousand dong) per share that it spent in 2018 to buy 5% shares. their current installment in Ubisoft. Tencent is also trying to buy more shares from private shareholders, who own a total of 80% of Ubisoft’s shares.
According to a source close to the negotiations, Tencent and Guillemot have yet to finalize their deal, and that could change. It’s also not clear how many shares Tencent will buy overall, or what percentage of Ubisoft’s shares the company hopes to acquire. Neither Tencent nor Ubisoft were available to answer questions about the deal, and Reuters could not reach Guillemots for clarification. However, one source noted that Tencent is offering shares at a premium to Ubisoft’s current share price to stave off competition. Additionally, senior Tencent executives are said to have flown to France to discuss the acquisition with the Guillemot family, who have opposed previous attempts to acquire Ubisoft.
Two Reuters sources also noted that the “aggressive” acquisition offer is part of Tencent’s initiative to acquire quality indie game studios. The company acquired a majority stake in Clash of Clans developer Supercell for $8.6 billion in 2016, owning a 9% stake in Elite Dangerous game developer Frontier Developments, and has stakes in video game developers Epic Games and Riot Games. Tencent also plans to acquire Crackdown 3 developer Sumo Digital for $1.3 billion.
Tencent’s overseas expansion may be driven in part by domestic pressure. Tencent’s revenue from China fell 1% last quarter while international revenue grew 4%. The company is also struggling with Chinese regulators, who froze new game licenses last year. Even if the ban ends in April, the Chinese government has yet to grant Tencent any new licenses. Against that backdrop, it’s not entirely surprising that Tencent wants to expand its influence.
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