Tencent, the Guillemot family said they would consider buying Ubisoft

(Bloomberg) — Tencent Holdings Ltd. and Ubisoft Entertainment SA’s founding Guillemot family are weighing options, including a potential buyout of the French video game developer after it lost more than half its value market this year, according to people familiar with the matter.

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The Chinese technology company and Guillemot Brothers Ltd. have been talking to advisers to help explore ways to stabilize Ubisoft and boost its value, the people said, asking not to be identified in the discussion about a private matter. One possibility under discussion would involve teaming up to take the company private, according to the people.

Ubisoft shares rose as much as 33 percent in Paris on Friday after a Bloomberg News report, the biggest gain since the company’s 1996 initial public offering.

Ubisoft shares have fallen about 40 percent this year, giving the company a market capitalization of about 1.8 billion euros ($2 billion). Tencent held 9.2 percent of Ubisoft’s net voting rights at the end of April, while the Guillemot family held about 20.5 percent, according to the company’s latest annual report.

Some minority shareholders, including AJ Investments, have pushed for a private takeover or sale of Ubisoft to a strategic investor amid the falling share price. Discussions are at an early stage and there is no certainty that they will lead to a transaction. Tencent and the Guillemot family are also considering other alternatives, according to the people.

Spokespeople for Ubisoft and the Guillemot family declined to comment. A representative for Tencent could not immediately comment while on vacation in China for a week.

Last month, Ubisoft shares fell to their lowest level in more than a decade after the company cut its outlook on weaker-than-expected sales and a delay for the highly anticipated title Assassin’s Creed Shadows. The video game firm has struggled over the past few years to recover from a pandemic-era production slump that led to delays in new game launches and canceled titles.

Several private equity firms, including Blackstone Inc. and KKR & Co., were exploring potential bids for Ubisoft in 2022 amid a wave of big deals in the video game industry, Bloomberg News reported at the time. Later that year, the founding family partnered with Tencent, which bought 49.9% of the Guillemot Brothers holding company, in addition to its direct stake in Ubisoft.

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The deal was seen by analysts as a way to keep suitors at bay, allowing the brothers to remain in control of Ubisoft’s governance, with Tencent’s stake capped below 10 percent with no operational veto rights. Under the agreement, Tencent could not sell its shares in Ubisoft for five years, after which the Guillemot family has the right of first refusal. The pact allows the brothers to talk and work with whoever they want, Yves Guillemot, Ubisoft’s chairman and chief executive, said in an interview last year.

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