Shares of the French video game manufacturer Ubisoft rose greater than 30% on Friday after a media report Tencent and the founding Guillemot family are considering a possible takeover of the corporate.
Bloomberg News reported On Friday, Tencent and the Guillemot family, each minority shareholders in Ubisoft, were amongst those considering a takeover after the corporate lost greater than half of its market value this 12 months.
One possibility currently being discussed is a mix of Tencent and the Guillemot family to take the corporate private, the business news agency reported, citing people aware of the matter.
Shares of Ubisoft rose 33.5% by Friday's close following the discharge of the report.
Ubisoft declined to comment on the Bloomberg News report. When contacted by CNBC on Friday, Tencent was not immediately available for comment.
The European gaming giant, best known for its popular “Assassin's Creed” franchise, has been in a state of uncertainty currently as investors worry about its lackluster triple-A games pipeline and the corporate's overall management made.
Last week, Ubisoft announced that it was delaying the discharge of the following title in its popular game series, “Assassin's Creed Shadows,” by three months to February 14, 2025, after demand for the corporate's “Star Wars Outlaws” was “weaker than expected.” failed “game that was released in August.
Ubisoft also lowered its net bookings forecast for fiscal 2025 to around 1.95 billion euros, below the 2.32 billion euros Ubisoft reported for fiscal 2024.
Tencent, which owns about 10% of Ubisoft, is one of China's largest technology companies. The company, best known for its strong gaming market share in China, is behind the Chinese multiplayer online battle arena game “Honor of Kings,” which it publishes under its publishing arm TiMi Studio Group.
Activist pressure
Speculation a few possible takeover is surging as Ubisoft shares trade at decade lows. Last week, AJ Investments, an activist investor with lower than 1% stake in Ubisoft, said it had won the support of 10% of Ubisoft shareholders to drive changes at the corporate.
In an open letter last Thursday, the private equity firm said it had hired “industry experts” as potential replacements for current Ubisoft management to implement a turnaround strategy at Ubisoft. It called on Ubisoft to sell itself to non-public equity groups or Tencent.
Following Ubisoft's slashing of guidance and a second-quarter performance that “fell short of the company's expectations,” CEO Yves Guillemot announced that the corporate's board would launch a review to “further improve” execution.
In addition to delays to its debut title, Ubisoft can also be coping with a slump across the gaming industry. According to research firm Newzoo, the worldwide gaming market is predicted to grow just 2.1% year-on-year in 2024 – nowhere near the rapid growth seen in the course of the Covid-19 pandemic years of 2020 and 2021.
James Lockyer, technology research analyst at British investment bank Peel Hunt, told CNBC earlier this week that a part of the issue for game publishers today is that gamers are devoting more time to older games than newer titles.
“More choice and tighter budgets when it comes to cost of living have resulted in consumers’ money being spread more thinly, resulting in sales and ROI.” [return on investment] “One of these games often falls short of expectations,” Lockyer told CNBC via email.
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