- In a move to bolster its gaming portfolio, Ubisoft (OTC Pink:UBSFF) announced the creation of a new subsidiary, with Chinese gaming giant Tencent Holdings (OTC Pink:TCEHY) investing €1.16 billion (C$1.78 billion)
- This partnership aims to enhance Ubisoft’s best-known game brands, including Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six
- The investment from Tencent values the new subsidiary at €4 billion, implying a 4x multiple based on its average sales from full-year 2023 to 2025
- Ubisoft stock (OTC Pink:UBSFF) opened trading at US$15.24
In a move to bolster its gaming portfolio, Ubisoft (OTC Pink:UBSFF) announced the creation of a new subsidiary, with Chinese gaming giant Tencent Holdings (OTC Pink:TCEHY) investing €1.16 billion (C$1.78 billion). This partnership aims to enhance Ubisoft’s best-known game brands, including Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six.
This amounts to a 25 per cent ownership by Tencent, in addition to the 10 per cent it already holds in Ubisoft.
Shares of the popular French video game publisher surged by 10.3 per cent shortly after Europe’s opening bell on Friday, reflecting investor optimism about the new venture. According to a statement issued by Ubisoft on Thursday, the new subsidiary will focus on building game ecosystems designed to become truly evergreen and multi-platform.
“With the creation of a dedicated subsidiary that will spearhead development for three of our largest franchises and the onboarding of Tencent as a minority investor, we are crystalizing the value of our assets, strengthening our balance sheet, and creating the best conditions for these franchises’ long-term growth and success,” Yves Guillemot, Ubisoft’s chief executive said in a news release. “With its dedicated and autonomous leadership team, it will focus on transforming these three brands into unique ecosystems.”
The investment from Tencent values the new subsidiary at €4 billion, implying a 4x multiple based on its average sales from full-year 2023 to 2025. This valuation is a sign of the potential growth and profitability of Ubisoft’s franchises.
The Guillemot family, Ubisoft’s founder and largest shareholder, began exploring talks with Tencent in September as part of a bid to recover from underperformance by some of the company’s main titles. Guillemot emphasized that the new unit would be instrumental in developing the Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six brands, thereby strengthening Ubisoft’s balance sheet.
Ubisoft faced a challenging year, losing almost half of its stock market value due to results below expectations and warnings about dropping sales and delayed game releases. In February, the company reported a 52 per cent year-on-year decline in third-quarter net bookings.
In a bid to turn the tide, Ubisoft recently launched Assassin’s Creed Shadows, the latest installment of the franchise. The game has received positive reviews and promising early sales, leading to an almost 8 per cent jump in Ubisoft’s shares on March 24th.
With Tencent’s substantial investment and the creation of the new subsidiary, Ubisoft is poised to leverage its renowned game brands and innovative strategies to regain its footing in the competitive gaming industry.
About Ubisoft
Ubisoft Entertainment Inc. develops, publishes and distributes video games for consoles, PCs, smartphones and tablets in physical and digital formats. It owns several popular brands and a diversified portfolio of franchises, including Assassin’s Creed, The Crew, Far Cry and Tom Clancy’s Ghost Recon.
Ubisoft stock (OTC Pink:UBSFF) opened trading at US$15.24.
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(Top image: Ubisoft Entertainment.)
