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Tencent's Buy-In does not affect ubisoft's independence, French gaming giant's Co-Founder says 2022-09-14
Tencent's Buy-In Does Not Affect Ubisoft's Independence, French Gaming Giant's Co-Founder Says
The recent increase of Chinese internet behemoth Tencent Holdings' shareholdings in Ubisoft Entertainment will not only bring funds to the French game publisher but will also allow it to remain independent, Ubisoft's co-founder said recently. The buy-in rules out the possibility of a full sale of the company, an analyst said.
“The expansion of the concert with Tencent further reinforces Ubisoft's core shareholding around its founders and provides the company with the stability essential for its long-term development,” Yves Guillemot, who is also chief executive officer, said at a press conference on Sept. 10.
Tencent's move dampens the prospect of a full sale of Ubisoft and wards off other potential predators, analyst Charles-Louis Planade of MidCap said earlier. Shares of Ubisoft tumbled by over 20 percent last week when the firm announced Tencent's move.
Tencent acquired 49.9 percent equity in Ubisoft's biggest shareholder, Guillemot Brothers, which is run by Guillemot, for EUR300 million (USD303.6 million) on Sept. 7 as the Chinese firm seeks to expand its footprint in the international gaming market. In this way it hiked its stake in Ubisoft to 9.99 percent from 5 percent, becoming majority shareholder.
Ubisoft can still work with other partners, Guillemot said. The French gaming publisher has been careful to retain its automomy. There will be no changes to Ubisoft's management team, Tencent will not hold any executive positions in the firm and will have no veto power over any operations. Tencent may also not sell the shares for five years, and after that, it must give first choice to the Guillemot family. It can also not hike its stake any further for the next eight years.
Ubisoft cooperates with Chinese investors mainly because of China's developed digital gaming market, especially Shenzhen-based Tencent's huge user base, Guillemot told Yicai Global previously.
The French game developer known for the video game Assassin's Creed has encountered difficulties in recent years. The firm spent EUR200 million (USD202.6 million) in the 2021 fiscal year, but generated EUR170 million in revenue in the previous fiscal year.
This year the Saint-Mande-based company lowered its performance expectations for the second fiscal quarter, with revenue now forecast to grow by 10 percent rather than 20 percent, as two games were not released on schedule.
Ubisoft is preparing to put its most popular games Assassin's Creed, Far Cry, and Tom Clancy's Rainbow Six Siege on digital platforms and generate EUR3 billion in revenue in the next five years. It is also working with Chinese streaming media Netflix Games to develop three mobile games.
Source: Yicai
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