Tencent to Raise Investment Stake in Ubisoft to Nearly 50%

Tencent Holdings Ltd. is set to further its investment in Ubisoft Entertainment SA, resulting in its new major overseas deal, although dulling a potential complete sale of the French video game company.

The Chinese tech giant plans to raise its investment in Ubisoft’s parent Guillemot Brothers Ltd. by paying €300 million ($297.1 million) for a 49.9% stake.

It will also indirectly buy a stake in the Montreuil-based game maker for €200 million ($198 million), which brings the company’s value at $10 billion or €80 per share.

In addition, Shenzhen-based Tencent will make a €100-million investment in Ubisoft’s holding firm. Furthermore, the agreement allows Tencent to increase its direct stake to 9.99% eventually from 4.5%, although operational veto rights will not be included.

Tencent’s stake in Guillemot Brothers granted it voting rights of 5%, while control over the business stays with the brothers.

Tencent’s Overseas Expansion

Tencent is steadily expanding overseas after a slowing economy and strict COVID regulations in China curbed its domestic growth.

The company recently invested in Japan’s Elden Ring developer From Software Inc., and in 2021, acquired UK’s video game holding firm Sumo Group Ltd. for $1.26 billion.

Tencent’s current strategy involves gaining access to hit video game titles from publishers, such as Activision Blizzard Inc., and making them available to mobile, which it did with Call of Duty Mobile and PUBG Mobile.

As China gradually eases its gaming restrictions, Ubisoft games, like Tom Clancy’s Rainbow Six Siege, may have the opportunity to be released in the country’s market with Tencent’s help.

The Assassin’s Creed maker has become a potential acquisition candidate, as concerns over delayed releases of its new games and allegations of harassment and sexual misconduct led its shares to a loss of around 45% since the beginning of 2021.

Moreover, its independent video game maker status has drawn attention after Microsoft Corp. entered a deal to acquire Activision Blizzard for $68.7 billion.