Shares of Ubisoft rose sharply by over 30% on Friday following reports that Tencent and the Guillemot family, who are both minority shareholders of the French video game publisher, are considering a potential buyout of the company. One potential option being discussed is for Tencent and the Guillemot family to partner up to take the company private. This news comes after Ubisoft’s market value dropped by more than half this year due to investor concerns over the lackluster games pipeline and management of the company. The European gaming giant, known for its popular “Assassin’s Creed” franchise, recently announced a delay in the release of its next title, “Assassin’s Creed Shadows,” to February 2025.
Following the guidance cut and underwhelming performance in the second quarter, CEO Yves Guillemot announced that the firm’s executive committee would launch a review to enhance execution. Ubisoft is facing challenges not only due to delays in its premier title but also due to a broader slump in the games industry. The global games market is expected to grow by only 2.1% year-over-year in 2024, a far cry from the growth levels seen during the Covid-19 pandemic years. Consumers are spending more time on older games and are being selective about new titles, impacting revenues and return on investment for game publishers.
Tencent, one of China’s largest technology firms, owns a roughly 10% stake in Ubisoft and is considering options such as a buyout along with the Guillemot family. This move is in response to Ubisoft trading at decade lows and pressure from activist investors like AJ Investments, who have rallied support from 10% of Ubisoft’s shareholder base to push for changes at the company. AJ Investments has recommended selling Ubisoft to private equity groups or Tencent as part of a turnaround strategy. The uncertainty surrounding Ubisoft’s future and its recent performance have prompted investors to call for changes in the management and direction of the company.
Ubisoft’s decision to delay the release of “Assassin’s Creed Shadows” and lower its net bookings guidance for the fiscal year to 2025 has sparked further concerns among investors. The company’s stock price plummeted prior to the news of a potential buyout by Tencent and the Guillemot family. The situation has highlighted the challenges faced by game publishers in an increasingly competitive market with changing consumer preferences and economic pressures. The need for Ubisoft to revamp its strategy and address issues in its games pipeline has become more urgent in light of the recent developments.
The speculation over a buyout of Ubisoft by Tencent and the Guillemot family underscores the ongoing turbulence in the gaming industry and pressures faced by major players like Ubisoft. The possibility of a takeover by Tencent, a powerhouse in the Chinese gaming market, could potentially reshape the future of Ubisoft and streamline its operations. The strategic decision to take the company private would allow for greater control and flexibility in navigating the challenges of the industry. It remains to be seen how Ubisoft will respond to these potential developments and whether a buyout by Tencent and the Guillemot family will materialize in the coming months. The fate of Ubisoft and its iconic franchises like “Assassin’s Creed” hangs in the balance as the company navigates a critical juncture in its history.
