Tencent increased its stake in Ubisoft to 49.9%
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Chinese company Tencent has increased its stake in French video game developer Ubisoft. As reported in statement Ubisoft, under the agreement signed by the parties, Tencent receives a 49.9% stake with 5% voting rights in the company of the Ubisoft founding family – Guillemot Brothers Limited. Tencent’s investment in Guillemot Brothers Limited will amount to €300 million, of which the Chinese company pays €200 million for shares, and €100 million goes to raise capital. As part of the deal, the value of the entire Ubisoft, the developer of Assassin’s Creed, Tom Clancy’s Splinter Cell, Prince of Persia and many other popular video games, is estimated at €10 billion.
Under the terms of the agreement, Tencent has no right to sell its shares in Ubisoft for five years, and also for eight years to increase its stake above 9.99%. In addition, as part of the agreement, Tencent is providing Guillemot Brothers Limited with a long-term debt refinancing loan and additional financial resources.
According to analysts surveyed ReutersThe deal could help Tencent ease some of the pressure the company is under in the Chinese market, where regulators haven’t given it any new game licenses since last June. In general, the deal changes little in the strategic partnership between the two companies, says Matthew Kanterman, director of research at Ball Metaverse Research Partners. “Basically, this is Tencent’s bet that Ubisoft will be able to improve performance, that together they will be able to create new mobile games and bring existing Ubisoft games to the Chinese market after the regulatory climate improves,” he says.
Meanwhile, shares of Ubisoft in trading in Europe today are falling sharply. In the middle of the day, their fall exceeded 13.5%. Analysts at Reuters attribute this to the fact that the deal with Tencent undermines the prospect of selling Ubisoft in its entirety, and this worries investors.
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