Ubisoft, a French video game publisher, saw its shares increase by over 30% after reports emerged that Tencent and the Guillemot family are considering a potential buyout. This comes after Ubisoft faced a significant decline in market value this year due to concerns about its game pipeline and overall management. One possibility being discussed is a partnership between Tencent and the Guillemot family to take the company private, according to Bloomberg News. Ubisoft recently announced the postponement of its upcoming game release and lowered its financial guidance for the fiscal year.
Tencent, a major Chinese technology firm and minority shareholder in Ubisoft, is known for its dominance in the gaming industry. As Ubisoft shares hit decade lows, there has been speculation about a potential takeover. Activist investor AJ Investments, holding less than 1% stake in Ubisoft, has garnered support from 10% of the company’s shareholders for changes. The investor has called for new management to implement a turnaround strategy or for Ubisoft to sell itself to private equity groups or Tencent. CEO Yves Guillemot announced a review by the executive committee to address performance issues.
Ubisoft is facing challenges with the delayed release of its key game, “Assassin’s Creed Shadows,” and a weaker than expected demand for its recent release, “Star Wars Outlaws.” The company has revised its net bookings guidance for the fiscal year, reflecting investor concerns about its future prospects. The games industry as a whole is experiencing a slowdown, with the global market expected to grow only 2.1% in 2024. This shift has resulted in gamers spending more time on older games, impacting the revenues and return on investment for newer titles.
The potential buyout plans involving Tencent and the Guillemot family highlight the uncertainty surrounding Ubisoft’s future amidst industry challenges. The company’s shares surged following the news, signaling investor interest in potential changes. Ubisoft’s management has faced pressure from activists to improve performance and explore strategic options, including a potential sale. The gaming industry’s current landscape, characterized by slower growth and changing consumer behavior, presents additional hurdles for publishers like Ubisoft. As the company navigates these challenges, the outcome of the reported buyout discussions with Tencent and the Guillemot family remains uncertain.
