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‘Assassin’s Creed’ maker Ubisoft to create a €4 billion subsidiary with Tencent worth more than itself
Tencent Holdings will invest €1.16 billion to acquire a 25% stake in this new entity, which will hold the licenses for the intellectual property of the games.
Prominent video game maker Ubisoft Entertainment announced that it will be creating a new subsidiary for its Assassin’s Creed, Far Cry and Tom Clancy’s Rainbow Six games with an enterprise value of about €4 billion ($4.3 billion).
Tencent Holdings Ltd. will invest €1.16 billion to acquire a 25 per cent stake in this new entity, which will hold the licenses for the intellectual property of the games in exchange for a royalty, according to a Bloomberg report.
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As a result, Ubisoft's US shares rose as much as 20 per cent. The closing price on the Nasdaq was $15.79, which is an uptick of 9.39 per cent or $1.355.
“This is a foundational step in changing Ubisoft’s operating model that will enable us to be both agile and ambitious,” Ubisoft CEO Yves Guillemot said in the statement.
This new unit's €4 billion valuation is actually higher than the group's current enterprise value itself, of which Tencent already holds a 10 per cent stake.
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The valuation “confirms that the group was severely undervalued,” the report quoted Charles-Louis Planade, an analyst at Midcap Partners as having said. “The cash injection of over €1 billion is very significant, and solves the group’s financing problems.”
This was the outcome of last year's disappointing Star Wars Outlaws launch and the delay of Assassin’s Creed Shadows, the latest installment in the franchise. However, Ubisoft's difficulties have been ongoing since the pandemic-era lockdowns eased.
The proceeds of the stake sale will be used to pay off debts as well as support other franchises, according to the report.
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The deal is expected to be closed by the end of 2025.
