Tencent wants to become the largest individual shareholder of Ubisoft

Tencent’s next move within the video game industry could go down in history. Up to four sources of Reuters They affirm that the Chinese giant plans to increase its participation in Ubisoft, a company of which it already owns 5%. It’s unclear how far Tencent wants to go, but insiders say the company’s goal is to become the largest single shareholder in the French publisher and developer.

Tencent’s idea is to increase its position within Ubisoft by acquiring part of the shares owned by the Guillemot family, which currently owns 15% of the company. Two of the sources maintain that Tencent could offer up to 100 euros per share, which would represent a premium of 127% compared to the average price of 44 euros that it has registered during the last three months, as well as a figure very close to the historical maximum price of 103 euros that the company’s titles reached in July 2018.

Tencent bought 5% of Ubisoft in March 2018 after Vivendi pulled out of the French company following a power struggle with the Guillemot family. At that time Tencent paid 66 euros per share and disbursed a total of 370 million euros. As a result of the Reuters news, Ubisoft’s stock has risen more than 15%, from 42 to almost 49 euros. Tencent is willing to reach 100 euros per share to avoid competition and please the Guillemots, as well as the rest of the shareholders willing to sell.

Tencent’s offer is very aggressive, but also thoughtful. Reuters says that top company executives flew to France in May to meet with the Guillemot family. During these meetings, the Chinese giant put on the table a term sheet, that is, a non-binding document that describes a series of conditions for an agreement, where the French publisher was valued at a price much higher than the current one. Tencent knows that without the Guillemot it will be difficult to increase its participation in Ubisoft.

For Tencent, the investment in Ubisoft is strategic. The company’s main market is China, but the government is increasingly regulating and delaying the approval of new licenses. For this reason, for several years Tencent has distributed its eggs in several baskets beyond the Asian country. In addition to buying developers like Riot Games (League of Legends), Supercell (Clash of Clans), and Grinding Gear Games (Path of Exile), he has made multiple investments in companies like Remedy, PlatinumGames, and Epic Games.

As for Ubisoft, right now its share is around 49 euros and Tencent could pay up to 100 euros for each one. If the Chinese company puts that figure on paper, we would be facing a difficult offer to reject.