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Ubisoft and its founding Guillemot family strengthened ties to Tencent through the sale of a minority passive stake in Guillemot Brothers Ltd. to the Chinese company. Tencent is buying the stake for $297.2 million.
Paris-based Ubisoft, which has a staff of 21,000 people, said the deal will be to the benefit of its long-term stability and development. Ubisoft said its governance is unchanged and the Guillemot family remains exclusive control of Guillemot Brothers Ltd., which owns a large stake in Ubisoft.
Under the deal, the companies said that Ubisoft will make more of its franchises available on mobile devices, where Tencent remains strong. Tencent became an investor in Ubisoft in 2018 after Vivendi threatened a hostile takeover of Ubisoft. Tencent was viewed as a friendly investor.
“The expansion of the concert with Tencent further reinforces Ubisoft’s core shareholding around its founders and provides the company with the stability essential for its long-term development,” said Yves Guillemot, CEO and cofounder of Ubisoft, in a statement.
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“In a context where platforms and business models are converging, this transaction, which validates our strategy and highlights the strong intrinsic value of the assets we have built over the long term, is excellent news for our teams, gamers and shareholders,” Guillemot added. “Tencent is a key shareholder partner for many of the industry’s leaders, who have created some of the most outstanding video games. This transaction reinforces our ability to create strong value over the coming years.”
Tencent has acquired a 49.9% economic stake in Guillemot Brothers Ltd., but it only has 5% of the voting rights. Tencent is paying $297.2 million for the stake, with two-thirds of that in share increase and a third in capital increase.
“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,” said Martin Lau, president of Tencent, in a statement. “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 triple-A 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.”
That values Ubisoft at 80€ per share, or $79.28 a share. That’s far above Ubisoft’s current trading price of $43.50 a share, which values the company at $5.3 billion. Tencent’s purchase values Ubisoft at $9.755 billion.
In addition, Tencent is providing Guillemot Brothers Ltd. with a long-term unsecured loan to refinance its debt and provide additional financial resources that can be used to acquire equity in Ubisoft.
Reiterating its main message, Ubisoft said Guillemot Brothers Ltd. remains exclusively controlled by the Guillemot family. Tencent will not be represented on its board of directors and will not obtain any consent or veto rights over the business.
The Guillemot family concert with respect to Ubisoft is extended to include Tencent.
The expanded concert may increase its stake to 29.9% of Ubisoft’s capital or voting rights. Within this limit, Guillemot Brothers Limited and the Guillemot family may each increase their equity ownership in Ubisoft.
Additionally, Ubisoft’s board of directors has authorized Tencent to increase its direct stake in Ubisoft from 4.5% to 9.99% of the capital or voting rights. Tencent will not be able to sell its shares in Ubisoft for a period of 5 years (and beyond will give the Guillemot family a right of priority) and will not be able to increase its stake in Ubisoft beyond 9.99% of Ubisoft’s capital and voting rights for a period of 8 years.
The agreement signed with Tencent reflects Ubisoft’s rich portfolio of assets, one of the most powerful in the video game industry: Ubisoft’s brands include The industry’s deepest and most diverse portfolio of proprietary brands, including Assassin’sCreed, Beyond Good & Evil, The Crew, Tom Clancy’s The Division, Far Cry, For Honor, Tom Clancy’s Ghost Recon, Hungry Shark, Just Dance, Might & Magic, Prince of Persia, Rabbids, Tom Clancy’s Rainbow Six, Rayman, Splinter Cell, Trackmania and Watch Dogs.
The company’s proprietary technologies including its cutting-edge engines (Anvil and Snowdrop), its online services and distribution platform (Ubisoft Connect) and Ubisoft’s rapidly expanding video game hosting business (i3D.net). Of Ubisoft’s 21,000 employees, 17,000 are in production.
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Author: Dean Takahashi