The Ubisoft logo is displayed during the European Brand Licensing Conference at ExCel London on September 24, 2024.
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Shares of French video game publisher Ubisoft The company's shares rose more than 30% on Friday after a media report stated that… Tencent The company's founding Guillemot family is considering a possible acquisition of the company.
Bloomberg News reported on Friday that Tencent and the Guillemot family, both minority shareholders in Ubisoft, are considering a takeover among other options after the company lost more than half its market value this year.
One possibility currently being discussed is a combination of a partnership between Tencent and the Guillemot family to take the company private, the business news agency reported, citing people familiar with the matter.
Ubisoft shares rose 33.5% at market close on Friday after the report was published.
Ubisoft declined to comment on the Bloomberg News report. Tencent was not immediately available for comment when contacted by CNBC on Friday.
The European gaming giant, best known for its popular “Assassin's Creed” franchise, has been in a state of uncertainty recently amid investor concerns about its lackluster triple-A gaming pipeline and the company's overall management.
Last week, Ubisoft said it would postpone the release of the next game in its popular game series, “Assassin's Creed Shadows,” by three months until February 14, 2025, after “lower-than-expected” demand for the company's “Star Wars Outlaws” game. “The game launched in August.
Ubisoft also lowered its net bookings guidance for fiscal year 2025 to approximately €1.95 billion, lower than the €2.32 billion Ubisoft announced for fiscal year 2024.
Tencent, which owns approximately 10% of Ubisoft shares, is one of the largest technology companies in China. The company, known in China for its strong gaming market share, is behind the Chinese massively multiplayer online battle arena game “Honor of Kings” which it publishes under its publishing arm TiMi Studio Group.
Activist pressure
Speculation about a potential takeover comes as Ubisoft shares are trading at their lowest levels in a decade. Last week, AJ Investments, an activist investor that owns less than 1% of Ubisoft shares, said it had the support of 10% of Ubisoft's shareholder base to push for changes at the company.
In an open letter last Thursday, the private equity firm said it had tapped “industry experts” as potential replacements for Ubisoft's current management to achieve Ubisoft's turnaround strategy. It called on Ubisoft to sell itself to private equity groups or Tencent.
Following Ubisoft's guidance cut and second-quarter performance that “fell short” of the company's expectations, CEO Yves Guillemot announced that the company's executive committee would launch a review to “further improve” execution.
Along with the delay in the release of its first title, Ubisoft is also facing a stagnation across the gaming industry. The global gaming market is expected to grow just 2.1% year-on-year in 2024, according to research firm Newzoo, which is nowhere near the high growth levels seen in the COVID-19 pandemic years of 2020 and 2021.
Part of the problem with game publishers today is that players are devoting more time to older games than newer games, James Lockyer, a technology research analyst at British investment bank Peel Hunt, told CNBC earlier this week.
“More choices combined with a compressed cost-of-living portfolio means that consumers' money is spread less thinly, resulting in revenue and return on investment (ROIs) for those games often coming in below expectations,” Lockyer told CNBC via email.
