Assassin’s Creed: Tencent determines fate favouring Ubisoft brotherhood

The Assassin’s Creed computer game series pits people who wish to exercise free will against determinists who want to control them. The Guillemot brothers, founders of the game’s publisher Ubisoft, seemingly fall into the second camp.

They have bolstered anti-takeover defences by forging a closer relationship with China’s Tencent. Minorities may see the brothers as the baddies in this gameplay: Ubisoft shares fell 17 per cent on Wednesday morning.

The deal is at odds with Tencent’s wider strategy of divesting the myriad of stakes it holds in gamemakers globally. Economic wobbles and an embargo on new releases in China have taken the shine off its most lucrative business.

The logic for Ubisoft is straightforward. Delays in new releases and disappointing earnings have weighed on shares. The Guillemots must fear that independent investors would back any bid reprising Vincent Bolloré’s drawn-out overtures.

A hostile takeover offer is now unlikely. Tencent is paying €300mn for a 49.9 per cent economic stake in Guillemot’s family holding company that owns a combination of shares and derivatives in Ubisoft. The valuation of €80 a share is more than double the latest traded price, but that assumes only the equity holding — not the derivatives — are counted in the deal. 

In addition, Tencent was also granted permission to increase the direct stake it has held in Ubisoft since 2018 from 4.5 per cent to 9.99 per cent. Tencent is barred from increasing its direct holding beyond the new limit for eight years. 

Tencent will become part of the Guillemot family concert party, which will hold almost a fifth of shares and close to a quarter of Ubisoft votes. The partners can be expected to increase their shareholding to 29.9 per cent of shares, just below the level where a takeover offer is required. 

Cash-rich tech giants are buying up games companies in hopes this will help them build competing metaverses. That has buoyed shares in Ubisoft. The message of the Guillemots to Silicon Valley and shareholders hoping to sell out for a quick profit is simple: game over.