Shares of Assassin's Creed Maker Ubisoft Slump After Tencent Buys Stake in Holding
07 September 2022 - 6:42PM
Dow Jones News
By Mauro Orru
Shares in Ubisoft Entertainment SA, the maker of the Assassin's
Creed videogame series, plunged Wednesday after Tencent Holdings
Ltd. acquired a minority stake in the family holding that controls
the French videogame company.
At 0805 GMT, Ubisoft shares traded 12% lower at EUR38.46.
Ubisoft said Tuesday that Tencent had bought a 49.9% stake in
Guillemot Brothers Limited, the holding company of the Guillemot
family that founded Ubisoft in 1986. The Chinese social-media and
videogame giant is investing 300 million euros ($297.1 million) in
the holding, including EUR200 million on the share acquisition and
EUR100 million on a capital increase.
Ubisoft's board of directors also gave Tencent the green light
to raise its direct stake in Ubisoft to 9.99% from 4.5%.
The move by Tencent is a vote of confidence in a fast-growing
sector as companies race to build immersive game experiences
powered by the metaverse. Companies are jockeying for position in
the metaverse--a virtual world in which users can play, work and
shop across different platforms using digital avatars--since
technology majors aiming to build the new virtual ecosystem are
expected to first have to master all aspects of videogaming.
Many of the technologies that are set to power the metaverse,
from artificial intelligence to blockchain, cloud computing, and
virtual reality, "are currently being experimented with and
mastered by videogame companies like Ubisoft," Ubisoft Chief
Executive Yves Guillemot told The Wall Street Journal in
February.
Still, Tencent's move rattled investors. The Chinese company is
providing a long-term unsecured loan to Guillemot Brothers Limited
to refinance its debt and inject additional funds that could be
used to acquire Ubisoft equity.
However, the Guillemot family will retain control of Guillemot
Brothers Limited as Tencent won't be represented on its board of
directors, nor will it obtain consent or veto rights over the
business.
Ubisoft has been watching from the sidelines as rivals have
engaged in a flurry of deal making this year. Mr. Guillemot said
Ubisoft is able to remain independent, citing its financial
strength and game portfolio. Aside from Assassin's Creed, Ubisoft's
stable also includes the Just Dance, Tom Clancy's, Far Cry, For
Honor, and Watch Dogs franchises.
Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94
(END) Dow Jones Newswires
September 07, 2022 04:27 ET (08:27 GMT)
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