Chinese tech giant Tencent and Ubisoft’s founding Guillemot family are reportedly considering a full buyout of the French video game publisher, Ubisoft. This move comes after a challenging year for Ubisoft, marked by significant drops in its stock price and disappointing game releases.
The Background: Tencent’s Growing Influence
According to sources familiar with the discussions, the two parties are exploring options to take Ubisoft private. Tencent currently holds a 9.2% stake in the company, while the Guillemot family controls approximately 20.5%. The joint acquisition would not only solidify their combined influence over Ubisoft but would also help navigate the troubled waters the gaming publisher has found itself in, with underperforming titles and delayed releases exacerbating the financial hit in 2024.
The declining stock price has been a key motivator in these deliberations. Ubisoft’s shares plummeted by nearly half throughout 2024, driven in part by the lackluster performance of Star Wars Outlaws and the delayed launch of Assassin’s Creed Shadows. This fall in value has attracted both Tencent and the Guillemot family to consider stabilizing the company by acquiring full control, which would allow for restructuring efforts without the scrutiny of public shareholders.
Why Ubisoft?
Ubisoft has long been a powerhouse in the gaming world, with franchises like Assassin’s Creed, Far Cry, and Tom Clancy’s games. However, recent years have been challenging for the French developer. Ubisoft’s share price has dropped dramatically—over 50% since the start of 2024—largely due to underwhelming game releases and financial targets that missed expectations.
Industry analysts have pointed out that the move would be strategic for Tencent, given its ambitions to expand globally in the gaming market. Tencent has a history of investments in gaming firms, including stakes in Epic Games and Riot Games, and a successful Ubisoft acquisition would further its foothold in the West.
For the Guillemot family, this buyout represents a potential safeguard for Ubisoft’s future amid increasing pressures from shareholders and competitors. Historically, Ubisoft has prided itself on remaining independent, fending off a hostile takeover bid by Vivendi in 2018. However, the current market conditions suggest that a buyout led by its founding family may be the best path forward.
While deliberations are still in the early stages, the potential ramifications are significant. Taking Ubisoft private would allow for more aggressive restructuring and strategic planning without the constraints of public market pressures. This could be particularly important for restoring investor confidence and breathing new life into a company that has long been a major player in the gaming world but has struggled recently.
Not everyone is optimistic, however. Some industry insiders and fans have expressed concern that a Tencent-backed acquisition could lead to a loss of creative freedom at Ubisoft, with more emphasis on profit-driven projects rather than innovative game development. Others worry about potential layoffs and increased focus on formulaic game design, reflecting broader industry trends when major corporations consolidate control over game publishers.
Ubisoft’s share price reacted positively to the news, surging by over 30% on the back of the Bloomberg report, indicating that investors are optimistic about the potential buyout. However, details on the exact terms of the deal and how it would be executed remain unclear.
For Ubisoft, going private could offer a lifeline amid financial struggles. It would allow the company to restructure and potentially recover from its poor performance in the stock market without the pressures of public scrutiny. Furthermore, Tencent’s backing could bring in more resources, helping Ubisoft expand its cloud gaming services and revitalize its stagnant game pipeline.
With Ubisoft at a crossroads, the outcome of these discussions could significantly alter the trajectory of one of the world’s most well-known gaming companies. Whether this potential buyout will mark a resurgence for Ubisoft or further intensify the challenges it faces remains to be seen.
