(Bloomberg) — Tencent Holdings Ltd. and Ubisoft Entertainment SA’s founding Guillemot family are considering options including a potential buyout of the French video game developer after it lost more than half its market value this year, according to people familiar with the matter.
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The Chinese tech company and Guillemot Brothers Ltd. have been speaking with advisers to help explore ways to stabilize Ubisoft and bolster its value, the people said, asked not to be identified discussing a private matter. One of the possibilities being discussed would involve teaming up to take the company private, according to the people.
Ubisoft shares rose as much as 33% in Paris on Friday following the Bloomberg News report, the steepest gain since the company’s 1996 initial public offering.
Shares of Ubisoft have fallen about 40% this year, giving the company a market capitalization of about €1.8 billion ($2 billion). Tencent owned 9.2% of Ubisoft’s net voting rights at the end of April, while the Guillemot family held about 20.5%, according to the firm’s latest annual report.
Some minority shareholders including AJ Investments have been pushing for either a take-private or a sale of Ubisoft to a strategic investor amid the stock price plunge. Considerations are at an early stage and there’s no certainty they will lead to a transaction. Tencent and the Guillemot family are also considering other alternatives, according to the people.
Spokespeople for Ubisoft and the Guillemot family declined to comment. A representative for Tencent couldn’t immediately comment during a holiday week in China.
Last month, Ubisoft shares fell to their lowest in more than a decade after the company cut its outlook on weaker-than expected sales and a delay on the hotly anticipated Assassin’s Creed Shadows title. The video game firm has over the past couple of years struggled to recover from a pandemic-era production crunch that resulted in delays in the release of new games and canceled titles.
Several private equity firms including Blackstone Inc. and KKR & Co. were studying potential bids for Ubisoft in 2022 amid a flurry of large deals in the video game industry, Bloomberg News reported at the time. Later that year, the founding family partnered with Tencent, which bought 49.9% of the Guillemot Brothers holding company in addition to the direct stake it held in Ubisoft.
The deal was seen by analysts as a way of keeping suitors at bay, allowing the brothers to remain in control of the Ubisoft’s governance with Tencent’s stake capped below 10% with no operational veto rights. Under the deal, Tencent also couldn’t sell its shares in Ubisoft for five years, after which the Guillemot family has the right of first refusal. The pact still allows the brothers to talk and work with whoever they want, Ubisoft Chairman and Chief Executive Officer Yves Guillemot said in an interview last year.
(Updates with shares in third paragraph.)
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