Tencent and Guillemot family considering buyout of Ubisoft | Bloomberg report

Bloomberg reported that Tencent and Ubisoft’s founding Guillemot family are discussing a potential buyout of the French video game developer, in a story citing unnamed sources.

Ubisoft has lost more than half its market value in 2024, and it has taken a pounding for a poorly received Star Wars: Outlaws open world title and a delay in its holiday release Assassin’s Creed: Shadows.

Tencent is the biggest company in gaming, and it already holds a stake in Ubisoft from the time when it helped CEO Yves Guillemot fend off a hostile acquisition by Vivendi.

Bloomberg said Tencent and Guillemot Brothers Ltd. have been speaking with advisers to help explore ways to stabilize Ubisoft and bolster its value. One option is taking the company private together. That’s a logical solution, considering the company’s valuation has fallen 40% to around $1.9 billion this year. After the report, Ubisoft shares rose as much as 33% in Paris trading on Friday. That was the biggest gain since Ubisoft went public in 1996.

Of course, if they go private, Ubisoft’s numbers will become opaque, and we’ll lose another source of transparency in the game industry. Tencent has about 9.2% of Ubisoft’s net voting rights, while the Guillemot family holds about 20.5%.

Ubisoft said it does not comment on “rumors or speculation,” and we’re awaiting comment from Tencent.

Star Wars: Outlaws has underperformed expectations, and Assassin’s Creed Shadows was highly anticipated because of its setting in the samurai era of Japan. But the game has faced criticism from core gamers and some Japanese fans over its choice of main characters.

After Vivendi’s failed attempt, Ubisoft was reportedly in play a couple of years ago as well. In 2022, Tencent bought 49.9% of the Giullemot Brothers holding company in addition to its stake in Ubisoft as part of a friendly investment that helped ward off any hostile takeover.

Ubisoft has more than 19,000 employees, making its seasoned game development teams among the envy of the industry. It has also shown willingness to expand to just about any new game platform. But those employees come with high operating costs that have lowered profits over time.