By
Temitope Olatunji
March 28th, 2024
While Ubisoft is at a market valuation of about $5.3 billion, sources revealed based on an internal discussion that Tencent could offer up to 100 euros (101.84) per share to buy a bigger stake.
Chinese technology and entertainment company Tencent Holdings is seeking a bigger stake in French video game company Ubisoft. After buying a 5% stake in 2018, the Chinese gaming giant is looking to become the single largest shareholder in Ubisoft. Four anonymous sources told Reuters that Tencent has reached out to the video game company, expressing interest in increasing its stake.
Tencent initially acquitted a 5% stake in Ubisoft about 4 years ago after the video game company ended its long-running battle with French media company Vivendi. After the tension subsided, Vivendi was to sell all of Ubisoft’s shares, which equaled 27.3% of the video game company’s share capital. Under the agreement, Ubisoft will repurchase the stock, and the media company agreed not to buy any of the company’s shares for the next five years. Moving on, Tencent signed a deal with Ubisoft to expand the French video game’s presence in China.
Now, Tencent wants to purchase more stakes to become Ubisoft’s No.1 single shareholder. As part of its desire to boost its ownership, the Chinese firm also plans to buy shares from Ubisoft’s public shareholders. However, two sources said the value of the new stake Tencent wants to purchase is currently unclear. Separate sources revealed that the Chinese firm is seeking to buy the additional stake from the Guillemot family. The Guillemot family founded Ubisoft and owns 15% of the company, according to sources. The publicly-traded company has about 80% of its shares owned by public investors.
Tencent Reportedly Offers 100 Euros per Ubisoft Share
While Ubisoft is at a market valuation of about $5.3 billion, sources revealed based on an internal discussion that Tencent could offer up to 100 euros (101.84) per share to buy a bigger stake. Meanwhile, it paid 66 euros per share for the first purchase in 2018. This seems to be a good offer for Ubisoft, which has been trading at an average of $45 per share in 2022. Also, the company’s highest valuation was in 2018 at $110. The 100 euros per share offer represents a 127% premium to Tencent’s shares.
The deal remains subject to change regardless of ongoing discussion, and its details are not final. If the plan is successful, it will help Tencent ease pressures in the domestic gaming market. A source said:
“Tencent is very determined to nail down the deal as Ubisoft is such an important strategic asset for Tencent.
In reaction to news of the additional stake purchase, Ubisoft stock surged as high as 21%. The increase was its biggest intraday gain since 2004. The company closed the day up 11%. Shares in Guillemot Corp., which the Guillemot family primarily owns, also surged 7%.