Overview of Ubisoft and Tencent’s Potential Asset Venture
- Ubisoft and Tencent are reportedly exploring a possible joint asset venture.
- This venture could lead to a partial restructuring of Ubisoft, although details about specific assets to be included remain undecided.
- Creating a spinoff may serve as a strategic alternative to a complete private buyout, which has been a recent consideration.
Ubisoft is currently in discussions with Tencent regarding the formation of a joint asset venture, as revealed by recent reports. This potential initiative may result in the fragmentation of Ubisoft’s structure, offering an alternative route to a private buyout that Tencent was previously contemplating to support the struggling company.
The aftermath of the pandemic has significantly impacted Ubisoft, as the game developer has encountered disappointing sales for several major releases. This downturn has led to a staggering decline of over 80% in its stock value since the beginning of the 2020s. Notably, the company announced in late 2024 that it was investigating “strategic options”for its future when its share price hit a 12-year low. During this period, discussions centered around obtaining the necessary financing from Tencent, which is already a minority stakeholder in Ubisoft.
According to Bloomberg, Tencent and Ubisoft are now considering an alternative arrangement. This initiative aims to establish a joint venture that would involve a selection of Ubisoft’s assets. By doing so, Tencent could increase its stake in Ubisoft, which currently stands at approximately 10%. No conclusive agreements have been reached yet, and discussions are ongoing regarding which specific assets will be included and their potential valuations.
Implications of the Proposed Asset Venture
The primary objective behind Tencent’s interest in this proposed asset venture appears to be enhancing Ubisoft’s market value. Should the plan advance, it could effectively eliminate the likelihood of Ubisoft transitioning to a private entity, especially as its stock price continues to decline.
Moreover, the joint venture could afford Tencent greater authority over selected Ubisoft intellectual properties, crucial for expanding its gaming portfolio beyond its home market. Notably, this collaboration could include some of Ubisoft’s most lucrative franchises, like Assassin’s Creed, which would be particularly appealing to a substantial investor such as Tencent.
Ubisoft’s last major success came from Assassin’s Creed Valhalla, which launched in late 2020 and achieved over $1 billion in revenue. The upcoming installment in the franchise has already experienced two delays, aiming to ensure a quality release. Currently, Assassin’s Creed Shadows is slated for launch on March 20, which presents a significant opportunity to positively influence Ubisoft’s financial standing ahead of the end of its fiscal year on March 31.
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