Ubisoft Shares Surge 31% on Tencent-Guillemot Buyout Talks

Ubisoft Entertainment, the French video game publisher known for its iconic franchises like Assassin’s Creed and Far Cry, is experiencing a significant surge in its stock price following reports that Tencent Holdings is contemplating a buyout in collaboration with the Guillemot family. This news comes as Ubisoft’s shares plummeted to a decade-low earlier this week, prompting investors to react positively to the potential acquisition.

As of Friday morning, Ubisoft’s stock skyrocketed by more than 31%, reaching just over €14 (approximately $15.35) by 11:40 a.m. This dramatic increase is a stark contrast to the company’s recent struggles, which saw its shares drop to an intraday low of €9.76 ($10.70) on September 26. This decline marked the lowest point for Ubisoft’s stock since November 2013, when shares traded at €9.15. The downturn was fueled by the company’s announcement of lowered fiscal guidance, forecasting sales of $2.2 billion for the upcoming year—falling short of analyst expectations of around $2.6 billion, as reported by FactSet. Additionally, Ubisoft faced backlash for delaying the release of its highly anticipated title, “Assassin’s Creed Shadows,” pushing it from November 15 to February 2025. This delay was attributed to the need for further polishing and refinement of the game’s experience.

Reports from Bloomberg suggest that discussions between Tencent and the Guillemot family are still in the early stages, but they indicate a serious interest in acquiring Ubisoft. The Guillemot family, which founded Ubisoft, operates through a holding company known as Guillemot Brothers. If a transaction proceeds, both Tencent and the Guillemot family are considering the possibility of taking Ubisoft private.

Tencent, a major player in the gaming industry, has been gradually increasing its stake in Ubisoft. The Chinese tech giant acquired nearly 50% of Guillemot Brothers in 2022, allowing it to hold 9.2% of Ubisoft’s net voting rights, giving it significant influence over shareholder decisions. Meanwhile, the Guillemot family retains about 20.5% of Ubisoft’s voting rights. This dynamic places both Tencent and the Guillemot family in a powerful position to effect change within the company.

The potential buyout has sparked speculation among industry analysts and investors about the future direction of Ubisoft. The discussions come amidst a backdrop of growing scrutiny from shareholders, especially in light of Ubisoft’s recent struggles to meet performance expectations. In fact, AJ Investments, an activist investment firm, recently expressed its deep dissatisfaction with Ubisoft’s management in a letter to the company. The firm claimed to have garnered the support of 10% of Ubisoft’s shareholders, advocating for the sale of the company to Tencent and the Guillemot family. AJ Investments has also proposed replacing Ubisoft’s management with industry experts, a move it argues could lead to a much-needed turnaround for the beleaguered publisher.

Over the years, speculation surrounding a potential acquisition of Ubisoft has intensified, driven by concerns from shareholders regarding the company’s strategic direction and performance. In addition to Tencent, other private equity firms, including Blackstone and KKR & Co., have reportedly explored opportunities to buy out Ubisoft, indicating a broad interest in the company’s future. The discussions surrounding a buyout highlight the challenges Ubisoft faces in maintaining its market position amidst a rapidly evolving gaming landscape.

The positive response from investors to the news of potential buyout discussions indicates a desire for change within Ubisoft, as the company has faced mounting pressure to improve its financial performance and reinvigorate its game development pipeline. The increasing interest from major players like Tencent and the Guillemot family suggests that there is optimism about the potential for strategic investments that could help Ubisoft regain its footing in the competitive gaming market.

As Ubisoft navigates these discussions, the company’s future remains uncertain. The outcome of potential negotiations with Tencent and the Guillemot family could redefine its trajectory, impacting not only its stock price but also its ability to deliver innovative and engaging gaming experiences to players worldwide.

In conclusion, the recent surge in Ubisoft’s shares reflects a renewed sense of hope among investors, driven by the prospect of a significant change in ownership and strategy. With Tencent’s involvement and the backing of the Guillemot family, there is potential for Ubisoft to undergo a transformation that could restore its standing in the gaming industry. The coming months will be crucial for Ubisoft as it considers its options and works to regain investor confidence.