Tencent has agreed to increase its investment in French video game maker Ubisoft in a deal that values the family-controlled group at more than €10 billion.
The move comes amid a wave of consolidation in the video game sector that has seen independent studios gobbled up by tech giants. As one of the few remaining indie players making big-budget titles, Ubisoft has long been seen as a takeover target, though the founding Guillemot family has long fiercely protected it, including from a Vivendi raid in 2015.
Under the deal announced Tuesday, the Chinese tech giant has agreed to pay €300 million to buy a 49.9% stake in Guillemot Brothers Limited, a vehicle that owns some of the family’s shares but will hold just 5% of the shares. voting rights in the entity and without representation on the board.
Tencent also has the option to increase the 4.5 percent direct stake it owns in the smartphone maker. assassin’s Creed Y Just dance from 2018 to 9.99%.
The deal implies a valuation of €80 per share for Ubisoft, which is significantly higher than Tuesday’s closing price of €43.50.
The two would act in concert under a shareholders’ pact, they said in a joint statement.
“The expansion of the concert with Tencent further strengthens Ubisoft’s core shareholding around its founders and provides the company with the stability essential for its long-term development,” Yves Guillemot, Ubisoft’s CEO, said in a statement.
“As a result of this transaction, Ubisoft’s governance will remain unchanged and Tencent will not have any operational veto rights,” it added.
Tencent has signed a suspension agreement whereby it will not sell its Ubisoft shares for five years or increase its stake beyond 9.99% for eight years.
“We are excited to expand our commitment to the founders, the Guillemot family,” said Tencent president Martin Lau, adding that Tencent planned to “bring some of Ubisoft’s best-known AAA franchises to mobile devices.”
Trading has been present in the sector since the start of the pandemic, a period that saw a sharp rise in gaming as other forms of entertainment disappeared.
Big tech and entertainment companies are eager to get their hands on game studios with well-known and successful titles, strong intellectual property seen as the most prized asset in an industry that already dwarfs other forms of mass-market entertainment, including music and cinema.
Beginning with the purchase of a majority stake in the US group Riot Games in 2011, Tencent has amassed an expanding portfolio of gaming investments in the US, Europe and Asia.
