Ubisoft (UBI, Financial), a renowned French video game company, has announced a strategic transformation by establishing a new gaming subsidiary based on its popular franchises: Assassin's Creed, Far Cry, and Rainbow Six. This new entity will hold the intellectual property licenses for these games and operate by collecting royalties. Tencent is set to invest €1.16 billion in this subsidiary, acquiring a 25% stake. The subsidiary is valued at approximately €4 billion, with the entire transaction expected to complete by the end of 2025.
Ubisoft plans to use the proceeds from this sale to pay down debt and support the development of other game series. The company aims to create a sustainable, multi-platform gaming ecosystem. Yves Guillemot, Ubisoft's co-founder and CEO, highlighted that bringing Tencent on board as a minority shareholder maximizes asset value and sets the stage for long-term growth and success of these game series.
Despite its current market valuation of only €1.905 billion, Ubisoft's partnership with Tencent represents a significant investment, equating to four times Ubisoft's annual sales from 2023 to 2025. Analysts believe Tencent's involvement will aid Ubisoft in expanding its global market reach and enhancing its brand influence and competitiveness. Meanwhile, Tencent will gain access to more game content and IP resources, further cementing its leadership in the gaming industry.
Ubisoft has been facing challenges, including game cancellations, layoffs, and a declining stock price. In January, the company appointed advisors to evaluate strategic options, sparking speculation about a potential sale. Recently, Ubisoft confirmed a strategic reorganization of its European operations, which included plans to close some subsidiaries, notably impacting the Ubisoft Benelux studio.
Additionally, a report from IGN revealed shareholder dissatisfaction with Ubisoft's lack of transparency and information withholding. The delayed release of Assassin's Creed Mirage also led to a significant stock price drop, causing substantial losses for retail investors.
