Tencent wants to increase its stake in Ubisoft by buying shares from the Guillemot family, but also from public shareholders. A takeover that would fit perfectly into the Chinese giant’s expansion strategy.
After big American studios like Riot Games or Epic Games, Tencent would like to take the biggest French video game studio under its wing. According to Reuters, the Chinese company wants to become the majority shareholder of Ubisoft, of which it has already held 5% since 2018. Also according to internal and anonymous sources, the Chinese juggernaut is currently pursuing an aggressive strategy to achieve its ends.
Convince with the help of big bills
Ubisoft is owned by three distinct parties: 5% to Tencent, 15% to the Guillemot family, founder of the company, and finally 80% to public shareholders. In order to become the majority shareholder of the company, Tencent wishes to buy all the shares of the Guillemot family. According to Reuters, the Chinese multinational has already submitted a non-binding offer describing the basic conditions of an investment. An offer “far superior” at the current Ubisoft share price, in order to get rid of any competition on the file. Tencent executives even took off last May for France to discuss the transaction directly with the five Guillemot brothers.
But if Tencent finally manages to get its hands on the shares of the founding brothers, it will still have to buy back the public shares. In order to convince the various shareholders, the Asian company would be ready to buy back the shares for $100 each. A maddening amount that represents more than double the current share price (€48). A figure also much higher than in 2018, when Tencent had increased its capital to 5%, which was €66 per share. For the record, the highest amount reached by Ubisoft stock was €108. An aggressive strategy with (very) big money justified by a great desire to acquire the French company: “Tencent is very determined to complete the deal as Ubisoft is an important strategic asset for Tencent.”, confides one of the sources. A stubbornness that finds its source in a complicated Chinese political situation.
China and video games, a story of lovelessness
The Chinese government has indeed set itself the objective of establishing maximum control over the consumption of video games in the Middle Kingdom. On the public side, first of all, with the restriction to 3 hours of online gaming per week for minors, and then on the professional side, with the cessation of operating authorizations for certain games, necessary for their marketing . After this 9-month freeze, the government finally issued 45 new licenses, but none to Tencent, yet the market leader. A decision for which the company is paying the price since, according to representatives of the company, last May, revenues from local games fell by 1% while those from international games increased by 4%. We therefore understand better why the French company, valued at 5.4 billion dollars, makes the Chinese juggernaut so salivate.