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Tencent (TCEHY) to Buy 49.9% Stake in Ubisoft Entertainment
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Tencent Holdings (TCEHY - Free Report) has made a strategic purchase that could pave the way for the buyout of Ubisoft in the future. The company has purchased a 49.9% stake in Guillemot Brothers Limited for €300 million (nearly $297.4 million) as well as a 5% voting stake in the company.
Guillemot Brothers Limited, which holds the largest stake within Ubisoft Entertainment (UBSFY - Free Report) , is exclusively controlled by the Guillemot family. While Tencent's investment was not made in Ubisoft directly, it had an implied valuation of €80 ($79.25) per share, an 85% premium on Ubisoft stock’s closing price of €43.28 ($42.87) as of Sep 6.
Ubisoft’s board of directors allowed Tencent to increase its direct stake in Ubisoft from 4.5% (purchased in 2018) to 9.99%. Tencent will not be able to sell its shares in Ubisoft for five years and will not be allowed to increase its stake above 9.99% for a period of eight years.
In addition, Tencent will give Guillemot Brothers Limited a long-term unsecured loan to help it refinance its debt and boost finances that could be used to buy further shares of Ubisoft, the publisher of Assassin's Creed and Just Dance.
Ubisoft has been seen as a takeover target, with concerns over delayed game launches and allegations of widespread sexual misconduct pushing the stock down about 45% since the start of last year.
In addition to bringing more Ubisoft's games to mobile, this Zacks Rank #1 (Strong Buy) company hopes to launch several Ubisoft PC titles in China. You can see the complete list of Zacks #1 Rank stocks here.
Asian Video Game Giants Continue Acquisition Spree
There has been a series of large-scale acquisitions in the video game industry after the pandemic drove a surge in customer demand. Tech and entertainment firms sought to harness this growth, with many pursuing brands that frequently churn out mega-popular titles.
Asia’s biggest gaming firms — Sony (SONY - Free Report) , NetEase (NTES - Free Report) and Tencent — are continuing their acquisition and investment sprees as they look to push into new formats and move overseas to mitigate the negative effects of a slowing domestic gaming market and tighter regulations.
NetEase purchased France-based game developer Quantic Dream last week, marking the establishment of its first fully owned studio in Europe. NetEase has also set up gaming studios in Japan and the United States.
Tencent has been gradually making moves to have a bigger presence in the western games space, particularly triple-A game development. Last week, it acquired a 16.25% stake in FromSoftware Inc., the developer of the recent hit action game Elden Ring. Sony had also invested in the company alongside Tencent.
Last week, Sony acquired Helsinki- and Berlin-based mobile game developer Savage Game Studios.
Tencent's deal with FromSoftware follows a string of gaming investments it made in Japan, including stakes in PlatnumGames and Marvelous Inc.
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Tencent (TCEHY) to Buy 49.9% Stake in Ubisoft Entertainment
Tencent Holdings (TCEHY - Free Report) has made a strategic purchase that could pave the way for the buyout of Ubisoft in the future. The company has purchased a 49.9% stake in Guillemot Brothers Limited for €300 million (nearly $297.4 million) as well as a 5% voting stake in the company.
Guillemot Brothers Limited, which holds the largest stake within Ubisoft Entertainment (UBSFY - Free Report) , is exclusively controlled by the Guillemot family. While Tencent's investment was not made in Ubisoft directly, it had an implied valuation of €80 ($79.25) per share, an 85% premium on Ubisoft stock’s closing price of €43.28 ($42.87) as of Sep 6.
Ubisoft’s board of directors allowed Tencent to increase its direct stake in Ubisoft from 4.5% (purchased in 2018) to 9.99%. Tencent will not be able to sell its shares in Ubisoft for five years and will not be allowed to increase its stake above 9.99% for a period of eight years.
In addition, Tencent will give Guillemot Brothers Limited a long-term unsecured loan to help it refinance its debt and boost finances that could be used to buy further shares of Ubisoft, the publisher of Assassin's Creed and Just Dance.
Ubisoft has been seen as a takeover target, with concerns over delayed game launches and allegations of widespread sexual misconduct pushing the stock down about 45% since the start of last year.
In addition to bringing more Ubisoft's games to mobile, this Zacks Rank #1 (Strong Buy) company hopes to launch several Ubisoft PC titles in China. You can see the complete list of Zacks #1 Rank stocks here.
Tencent Holding Ltd. Price and Consensus
Tencent Holding Ltd. price-consensus-chart | Tencent Holding Ltd. Quote
Asian Video Game Giants Continue Acquisition Spree
There has been a series of large-scale acquisitions in the video game industry after the pandemic drove a surge in customer demand. Tech and entertainment firms sought to harness this growth, with many pursuing brands that frequently churn out mega-popular titles.
Asia’s biggest gaming firms — Sony (SONY - Free Report) , NetEase (NTES - Free Report) and Tencent — are continuing their acquisition and investment sprees as they look to push into new formats and move overseas to mitigate the negative effects of a slowing domestic gaming market and tighter regulations.
NetEase purchased France-based game developer Quantic Dream last week, marking the establishment of its first fully owned studio in Europe. NetEase has also set up gaming studios in Japan and the United States.
Tencent has been gradually making moves to have a bigger presence in the western games space, particularly triple-A game development. Last week, it acquired a 16.25% stake in FromSoftware Inc., the developer of the recent hit action game Elden Ring. Sony had also invested in the company alongside Tencent.
Last week, Sony acquired Helsinki- and Berlin-based mobile game developer Savage Game Studios.
Tencent's deal with FromSoftware follows a string of gaming investments it made in Japan, including stakes in PlatnumGames and Marvelous Inc.