HONG KONG, Aug 4 (Reuters) - Tencent Holdings Ltd
plans to raise its stake in French video game group Ubisoft
Entertainment SA as the Chinese gaming giant pivots to
the global gaming market, four sources with direct knowledge of
the matter told Reuters.
China's largest social network and gaming firm, which bought
a 5% stake in Ubisoft in 2018, has reached out to the French
firm's founding Guillemot family and expressed interest in
increasing its stake in the firm, the sources said.
It is not clear how much more Tencent wants to own in
Ubisoft, valued at $5.3 billion, but Tencent aims to become the
single largest shareholder of the French company with an
additional stake purchase, two of the sources said, speaking on
condition of anonymity.
Tencent is hoping to buy a part of the additional stake in
Ubisoft, the maker of the blockbuster "Assassin's Creed" video
game franchise, from the Guillemot family, which owns 15% of the
firm, three of the sources said.
Tencent could offer up to 100 euros ($101.84) per share to
acquire the additional stake, said two of the sources with
knowledge of the internal discussions. It paid 66 euros per
share for the 5% stake in 2018.
Details of the deal are not yet finalised and are subject to
change, the sources said.
Ubisoft shares closed up 11% on Thursday, after having risen
as much as 21% earlier after the Reuters report in their biggest
daily rise since 2004.
Shares in Guillemot Corp SA, the holding company
in which the Guillemot family owns the majority shareholding,
ended 7.3% higher.
Hong Kong-listed Tencent saw its shares drop 2% in morning
trade on Friday while the Hang Seng Tech Index was
Tencent will also seek to acquire shares from public
shareholders of Ubisoft, two of the sources said, in a bid to
boost its ownership and become the single-largest shareholder.
About 80% of the French firm's shares are owned by public
shareholders, according to its latest annual report.
All the sources declined to be named as they are not
authorised to speak to the media.
Tencent and Ubisoft declined to comment.
Representatives of the Guillemot family could not be
immediately reached for comment.
The planned stake purchase, Tencent's latest major foreign
deal since a regulatory crackdown in late 2020, will help it
offset some of the pressures in the domestic gaming market.
China's video games market, the world's largest, has become
"Tencent is very determined to nail down the deal as Ubisoft
is such an important strategic asset for Tencent," one of the
At the top end of 100 euros per share, Tencent's offer will
be a premium of 127% to the stock's 44 euros average price over
the past three months, and is close to its historical price
ceiling at 108 euros in 2018.
Tencent has submitted to the Guillemot family a term sheet -
a non-binding offer describing the basic terms and conditions of
an investment - with a price "way above" the company's current
price to ward off potential competition, one of the sources
The aggressive offer comes as global gaming power houses
have been rushing to snap up quality independent game makers in
recent years, which are in scarcity, two of the sources said.
Tencent's senior executives flew to France in May to meet
the Guillemot family about the purchase, two of the people said.
China's gaming regulator has not granted any new game
licences to Tencent at home since June last year, before it
froze gaming approvals for nearly nine months. Since it resumed
approvals in April this year, none of the past four batches
included the company.
In May, Tencent reported that its domestic game revenue
dropped 1% in the first quarter while international game revenue
Tencent, which has stakes in U.S. video game developers Epic
Games and Riot Games, said in June it would release its flagship
mobile game "Honor of Kings" globally by the end of the year.
In 2016, it bought a majority stake in "Clash of Clans"
mobile game maker Supercell for roughly $8.6 billion, one of the
world's biggest ever gaming deals.
It also owns 9% of UK video gaming firm Frontier
Developments and said last year it would buy another British
developer Sumo in a $1.3 billion deal.
Ubisoft, whose titles also include "Prince of Persia" and
"Rainbow Six", in May forecast lower operating profit for
2022-23 after the company reported operating income for 2021-22
that missed estimates.
($1 = 0.9819 euros)
(Additional reporting by Pamela Barbaglia in London, Sudip
Kar-Gupta and Richard Lough in Paris; Editing by Sumeet
Chatterjee, David Evans and Jacqueline Wong)