PARIS (AFP) – In a bid to escape financial woes, French games giant Ubisoft said on Thursday it was creating a new subsidiary around its most popular franchises such as Assassin’s Creed in partnership with China’s Tencent.
The new unit, valued at around USD4.3 billion, will be 25 per cent controlled by Tencent, which will stump up EUR1.16 billion of new investment in exchange. Alongside Assassin’s Creed, the subsidiary will bring together Far Cry and Tom Clancy’s Rainbow Six – among the most popular long-running names in Ubisoft’s roster of game universes.
Ubisoft appears to be making the most of last week’s successful launch of the latest Assassin’s Creed installment, Shadows, on which much of its future was riding. Conditions for the Tencent deal include a bar on the French company losing its majority in the subsidiary for its first two years.
Tencent cannot increase its stake for the next five years — unless Ubisoft loses its majority in the mean time. Chief executive Yves Guillemot called the step a “new chapter in (Ubisoft’s) history”.
Last year brought a string of woes for Ubisoft, with several disappointing releases for would-be blockbuster games and a slump in its stock price. Spinning up the new subsidiary – whose name has not yet been announced — by the end of the year means the company is “crystallising the value of our assets, strengthening our balance sheet, and creating the best conditions for these franchises’ long-term growth and success,” Guillemot said. The deal also sees Tencent assert its hold on Ubisoft more strongly after climbing aboard in 2022.
The Chinese firm holds almost 10 per cent of the group’s stock — a threshold it is not allowed to cross before 2030 — while the founding Guillemot family owns around 15 per cent. Earlier this year, Ubisoft had said that it was “actively exploring various strategic and capitalistic options”.
Finance chief Frederick Duquet said on Thursday that “we received many expressions of interest that turned into several non-binding offers for different options”.
In the end, directors opted to create the subsidiary as this “allowed Ubisoft to maintain control of its key assets, with a view to creating very large brands worth multiple billions in the coming years,” Duquet added. Ubisoft plans to make further announcements on changes to the group at a later stage.
The company’s market capitalisation stood at EUR1.7 billion by close of trading in Paris on Thursday – or less than half the valuation of the new subsidiary. Teams working on the three major franchises will be brought together in the new France-based unit, especially Ubisoft’s Montreal studios – one of the largest in the company. In total, the publisher employs around 18,000 people worldwide, 4,000 of them in France.
Assassin’s Creed Shadows has pulled in three million players since its March 20 release, breaking a streak of disappointing launches for Ubisoft. The group will nevertheless push ahead with a cost-cutting plan drawn up in early 2023, under which it has already closed studios outside France and shed 2,000 jobs.
Ubisoft’s troubles reflect wider doldrums in the video games sector over the past two years.
