The Ubisoft logo appeared during Brand Licensing Europe at ExCel London on September 24, 2024.
John Keeble | Getty Images
Shares of the French video game publisher Ubisoft rose more than 30% on Friday after a media report that Tencent and the company’s founding Guillemot family are considering a possible takeover of the company.
Bloomberg News reported On Friday, Tencent and the Guillemot family, both minority shareholders of Ubisoft, were considering a takeover among other options after the company lost more than half its market value this year.
One possibility currently being discussed is for Tencent and the Guillemot family to combine to take the company private, the business news agency said, citing people familiar with the matter.
Ubisoft’s shares rose 33.5% from the market close on Friday after the report was released.
Ubisoft declined to comment on the Bloomberg News report. Tencent was not immediately available for comment when contacted by CNBC on Friday.
The European gaming giant, which is best known for its popular “Assassin’s Creed” franchise, has been in limbo lately amid investor concerns about its innocent triple-A game lineup and the company’s overall management.
Last week, Ubisoft said it had delayed the release of the next title in its popular game series, “Assassin’s Creed Shadows,” by three months to February 14, 2025, following “lower than expected” demand for “Star Wars Outlaws ” of the company. game, which was released in August.
Ubisoft also lowered guidance for its net bookings for fiscal 2025 to about 1.95 billion euros, down from the 2.32 billion euros Ubisoft reported for fiscal 2024.
Tencent, which owns about 10% of Ubisoft, is one of China’s largest technology companies. The company, best known in China for its strong gaming market share, is behind the Chinese multiplayer online battle arena game “Honor of Kings” which it publishes under TiMi Studio Group publishers.
Activist pressure
Speculations about a possible takeover come as Ubisoft shares are trading at decade lows. Last week, AJ Investments, an activist investor with less than a 1% stake in Ubisoft, said it had gathered the support of 10% of Ubisoft’s shareholder base to push for changes at the company.
In an open letter last Thursday, the private equity firm said it has hired “industry experts” as potential replacements for Ubisoft’s current management to implement a turnaround strategy at Ubisoft. He asked Ubisoft to be sold to private equity groups or Tencent.
Following Ubisoft’s guidance cut and a second-quarter performance that “missed” the company’s expectations, CEO Yves Guillemot announced that the company’s executive committee will launch a review to “further improve” execution.
Along with delays to its flagship title, Ubisoft is also struggling with an industry-wide recession. The global gaming market is set to grow by just 2.1% year-on-year in 2024, according to research firm Newzoo – nowhere near the soaring levels of growth seen during the Covid-19 pandemic years of 2020 and 2021.
James Lockyer, technology research analyst at British investment bank Peel Hunt, told CNBC earlier this week that part of the problem for game publishers today is that players are spending more time on older games than newer titles.
“More choice plus a tight wallet with the cost of living means consumers’ cash is spread more thinly, driving revenue and ROI [return on investment] of these games often come out below expectations,” Lockyer told CNBC via email.