Ubisoft finalises Tencent accord as it resumes trading

[PARIS] After a week away from the markets’ glare when the postponement of its results triggered speculation in the gaming world, French video game firm Ubisoft resumed trading Friday (Nov 21) with a stock rise and finalisation of an accord with Chinese tech giant Tencent.

Tencent will become a minority shareholder in a new Ubisoft subsidiary, Vantage Studios, comprising the French group’s three flagship franchises: Assassin’s Creed, Far Cry, and Rainbow Sky.

The Chinese group is investing 1.16 billion euros (S$1.74 billion) for a 26.3 per cent stake in the subsidiary, valuing it at 3.8 billion euros.

According to a statement by Ubisoft CEO Yves Guillemot, Tencent is barred from increasing or decreasing its stake for five years – unless its partner loses its majority shareholding.

Ubisoft shares rose 4.5 per cent as it resumed trading Friday following a week-long suspension.

The French company had stunned investors by postponing its results announcement without an explanation, triggering speculation in the video gaming world, including of a possible takeover.

Ubisoft said Friday the move was due to a “restatement” of its half-year results after new auditors found problems with the way it had accounted for a partnership.

Ubisoft’s stock initially soared 11.5 per cent before settling back to 7.06 euros, still leaving them 40 per cent lower than a year ago.

The Tencent transaction, Ubisoft said, will allow the group to reduce its debt, “while offering increased financial flexibility to support its transformation”.

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Based in France, the new subsidiary, co-led by Christophe Derennes and Charlie Guillemot, son of Yves, is part of a broader reorganisation of Ubisoft into “creative houses” with further details to be revealed in January.

Antoine Fraysse-Soulier, market analyst at eToro, said the postponement “doesn’t look very serious”, though it “created uncertainty in the markets”.

‘Positive dynamic’

Ubisoft said sales dropped 2.1 per cent to 657.8 million euros in the first half.

Net booking rose 22.6 per cent to 772.4 million at constant exchange rates, which it attributed to better-than-expected partnerships and a significant contribution from TV adaptations of its live-action and animated products.

It also said sales of “Assassin’s Creed” had exceeded expectations.

Ubisoft maintained its financial objectives for the year of stable revenue and operating income close to break-even.

Amid a global slowdown in the video game industry, Ubisoft has endured several setbacks in recent years, with lacklustre game launches and the premature cancellation of its online shooter XDefiant.

Since 2023, it has pursued a cost-cutting plan which has already seen the closure of several studios abroad and the departure of more than 3,000 employees.

The group, which had 17,097 employees at the end of September, launched a “targeted voluntary redundancy programme” and a “restructuring project” in its Northern European studios, particularly in Sweden and Finland, in October. AFP