Chinese tech giant Tencent Holdings (HKG:0700, OTC:TCEHY) is poised to double its stake in French video games company Ubisoft Entertainment via a 49.9% indirect stake acquisition of holding company Guillemot Brothers Ltd.
According to an Ubisoft press release, the investment amounts to €300mln (£258.4mln), at an implied valuation for Ubisoft of €80 per share.
In addition, Tencent is providing Guillemot Brothers with a long-term unsecured loan to refinance its debt and provide additional financial resources that can be used to acquire equity in Ubisoft.
Ubisoft’s governance remains unchanged and Tencent will not have any operational veto rights, and a five-year vesting period is in place.
The deal allows for Tencent’s direct stake in Ubisoft to increase from 4.5% to 9.99% with voting rights attributed accordingly.
Ubisoft chief executive officer and co-founder Yves Guillemot said: “In a context where platforms and business models are converging, this transaction, which validates our strategy and highlights the strong intrinsic value of the assets we have built over the long term, is excellent news for our teams, gamers and shareholders.
“Tencent is a key shareholder partner for many of the industry’s leaders, who have created some of the most outstanding video games. This transaction reinforces our ability to create strong value over the coming years.”
Ubisoft has been plagued with a range of issues including disappointing and delayed game launches, sexual misconduct allegations, mass staff departures, and an embarrassing NFT announcement.
Key titles for the developer inlcude Assassin's Creed, Far Cry, Rainbow Six and Watch Dogs.