Exclusive: Tencent seeks bigger stake in ‘Assassin’s Creed’ maker Ubisoft

Exclusive: Tencent seeks bigger stake in ‘Assassin’s Creed’ maker Ubisoft

HONG KONG, Aug 4 (Reuters) – Tencent Holdings Ltd (0700.HK) plans to boost its stake in French online game group Ubisoft Leisure SA (UBIP.PA) because the Chinese language gaming large pivots to the worldwide gaming market, 4 sources with direct data of the matter advised Reuters.

China’s largest social community and gaming agency, which purchased a 5% stake in Ubisoft in 2018, has reached out to the French agency’s founding Guillemot household and expressed curiosity in growing its stake in the agency, the sources stated.

It isn’t clear how far more Tencent needs to personal in Ubisoft, valued at $5.3 billion, however Tencent goals to turn out to be the only largest shareholder of the French firm with an extra stake buy, two of the sources stated, talking on situation of anonymity.

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Tencent is hoping to purchase part of the extra stake in Ubisoft, the maker of the blockbuster “Murderer’s Creed” online game franchise, from the Guillemot household, which owns 15% of the agency, three of the sources stated.

Tencent may provide as much as 100 euros ($101.84) per share to accumulate the extra stake, stated two of the sources with data of the inner discussions. It paid 66 euros per share for the 5% stake in 2018.

Particulars of the deal will not be but finalised and are topic to alter, the sources stated.

Ubisoft shares closed up 11% on Thursday, after having risen as a lot as 21% earlier after the Reuters report in their largest every day rise since 2004.

Shares in Guillemot Corp SA (GTCN.PA), the holding firm in which the Guillemot household owns the bulk shareholding, ended 7.3% greater.

Reuters Graphics

Hong Kong-listed Tencent noticed its shares drop 2% in morning commerce on Friday whereas the Grasp Seng Tech Index (.HSTECH) was flat.

Tencent may also search to accumulate shares from public shareholders of Ubisoft, two of the sources stated, in a bid to spice up its possession and turn out to be the single-largest shareholder.

About 80% of the French agency’s shares are owned by public shareholders, in keeping with its newest annual report.

All of the sources declined to be named as they aren’t authorised to talk to the media.

Tencent and Ubisoft declined to remark.

Representatives of the Guillemot household couldn’t be instantly reached for remark.

The deliberate stake buy, Tencent’s newest main overseas deal since a regulatory crackdown in late 2020, will assist it offset a number of the pressures in the home gaming market. China’s video video games market, the world’s largest, has turn out to be fiercely aggressive.

“Tencent could be very decided to nail down the deal as Ubisoft is such an necessary strategic asset for Tencent,” one of many folks stated.

On the prime finish of 100 euros per share, Tencent’s provide shall be a premium of 127% to the inventory’s 44 euros common worth over the previous three months, and is near its historic worth ceiling at 108 euros in 2018.

Tencent has submitted to the Guillemot household a time period sheet – a non-binding provide describing the fundamental phrases and circumstances of an funding – with a worth “method above” the corporate’s present worth to thrust back potential competitors, one of many sources stated.

The aggressive provide comes as world gaming energy homes have been dashing to snap up high quality impartial recreation makers in latest years, that are in shortage, two of the sources stated.

Tencent’s senior executives flew to France in Could to fulfill the Guillemot household concerning the buy, two of the folks stated.

DOMESTIC PRESSURES

China’s gaming regulator has not granted any new recreation licences to Tencent at residence since June final yr, earlier than it froze gaming approvals for almost 9 months. Because it resumed approvals in April this yr, not one of the previous 4 batches included the corporate. learn extra

In Could, Tencent reported that its home recreation income dropped 1% in the primary quarter whereas worldwide recreation income rose 4%.

Tencent, which has stakes in U.S. online game builders Epic Video games and Riot Video games, stated in June it will launch its flagship cellular recreation “Honor of Kings” globally by the top of the yr. learn extra

In 2016, it purchased a majority stake in “Conflict of Clans” cellular recreation maker Supercell for roughly $8.6 billion, one of many world’s largest ever gaming offers.

It additionally owns 9% of UK video gaming agency Frontier Developments and stated final yr it will purchase one other British developer Sumo in a $1.3 billion deal. learn extra

Ubisoft, whose titles additionally embrace “Prince of Persia” and “Rainbow Six”, in Could forecast decrease working revenue for 2022-23 after the corporate reported working earnings for 2021-22 that missed estimates. learn extra

($1 = 0.9819 euros)

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Further reporting by Pamela Barbaglia in London, Sudip Kar-Gupta and Richard Lough in Paris; Enhancing by Sumeet Chatterjee, David Evans and Jacqueline Wong

Our Requirements: The Thomson Reuters Belief Rules.

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