Chinese tech giant Tencent and Ubisoft’s founding Guillemot family are reportedly exploring a take-private buyout of the French video game studio Ubisoft. The company’s shares have fallen over 40 percent this year.
The potential deal, first reported by Bloomberg and confirmed by the company, comes as Ubisoft faces several internal and external challenges.
Controversies around Ubisoft
Ubisoft’s problems are partly self-inflicted. The company is facing a potential class action lawsuit over user privacy issues.
Additionally, online criticism has intensified over the studio’s next Assassin’s Creed game, which features a black samurai as one of the lead characters. High-profile figures, including Elon Musk, have criticized the game as being “too woke,” which has stirred debate and negatively impacted the company’s public image and sales.
Despite the character’s historical authenticity, the backlash has affected Ubisoft’s reputation. CEO Yves Guillemot referenced “polarised comments” during a recent earnings call, highlighting how the controversy may have contributed to the company’s underperformance.
Financial struggles and market reaction
Before news of the potential buyout surfaced, Ubisoft’s shares had dropped by more than 50 percent this year, pushing its market capitalization to approximately €1.8 billion. However, following the news of a possible take-private deal, the company’s market cap was slightly boosted.
Ubisoft, with an enterprise value exceeding €3 billion, reported €158 million in profit on €2.3 billion in revenue for the fiscal year ending March 31, 2024. The sharp decline in its stock price and ongoing issues have made Ubisoft an attractive target for a buyout.
Tencent’s strategic moves and past interest
The idea of taking Ubisoft private isn’t new. In 2022, private equity firms like Blackstone and KKR were exploring potential bids for the company. Later that year, the Guillemot family partnered with Tencent, which acquired 49.9 percent of the Guillemot family’s holding company and increased its direct stake in Ubisoft.
Analysts saw this move as a way for the Guillemot family to maintain control of Ubisoft’s governance while warding off other potential suitors.
The partnership between Tencent and the Guillemots allows them to influence Ubisoft’s future direction significantly. As the company struggles with its public image, controversial game launches, and financial downturns, this possible buyout may stabilize Ubisoft and potentially reshape its trajectory in the gaming industry.
