Under the transaction details, Tencent acquired 5% voting rights in Guillemot Brothers Limited in addition to its 49.9% economic stake.
Chinese conglomerate Tencent is raising its stake in video game company Ubisoft by almost $300 million. According to Ubisoft, the Chinese company is expanding its investments in the Assassin’s Creed maker through financial maneuvers. The deal between Tencent and Ubisoft valued the game developer at about $10 billion amid the move by top Chinese firms to stretch their reach abroad.
News of the stake increment came after Tencent had to deal with sexual harassment allegations which forced the company to reform its management. The company has also had difficult past years, announcing the delays of new games. During the struggling four-years period, the video game developer’s shares declined from around €100 to below €44.
According to a press release, Tencent is acquiring a 49.9% economic stake in Guillemot Brothers Limited, the largest Ubisoft shareholder. The Chinese conglomerate company also entered “into the concert” with the company’s founders. Guillemot Brothers Limited is the significant investment channel through which Ubisoft’s founders have been controlling the French video game company. The new stake Tencent is acquiring is an addition to the 4.5% stake it had in Ubisoft.
Transaction Details between Tencent and Ubisoft
Under the transaction details, Tencent acquired 5% voting rights in Guillemot Brothers Limited in addition to its 49.9% economic stake. The investment is worth €300 million, which includes a €200 million share acquisition and a €100 million capital increase. The Chinese company bought each share at the price of €80. Also, it will provide Guillemot Brothers Limited with additional money to refinance its debt and acquire equity in Ubisoft. While the Tencent and the Guillemot family control up to 29.9% of Ubisoft, the technology and entertainment company can now directly buy up to 9.99% of the game maker’s shares. However, Tencent is guided by specific rules. Firstly, the company cannot increase its stake in Ubisoft for eight years and cannot sell its shares for five years. In a case where Tencent wants to sell its shares in a five-year period, the Guillemot family gets first dibs.
Ubisoft Co-Founder and CEO Yves Guillemot referred to Tencent as a major shareholder partner to different industry leaders. He acknowledged that the company had created many outstanding games. In a statement, Guillemot noted that the transaction reinforced Ubisoft’s ability to develop strong value over the coming years.
Tencent President Martin Lau also commented on the new deal with Ubisoft. He stated:
“The team at Ubisoft has shown an impressive ability to consistently create world-class entertainment along with a diverse portfolio of brands that include some of the most successful franchises in the industry. We are excited to expand our engagement with the founders, the Guillemot family, as Ubisoft continues to develop immersive game experiences, and to bring some of Ubisoft’s most well-known AAA franchises to mobile. This agreement also aligns with our philosophy to invest alongside creative founders with full confidence that they will lead their companies to new heights.”
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