Ubisoft shares fall as Tencent deal seen reducing buyout prospects

Shares in Ubisoft Entertainment tumbled after it announced an agreement that sees China’s Tencent Holdings raise its stake in the firm, a move that analysts say dampens the prospects of a complete sale of the French game maker.

The deal with Tencent Holdings values the “Assassin’s Creed” and “Tom Clancy’s” video game maker at $10 billion, or around 80 euros per share, well above Tuesday’s stock price, closing at 43.5 euros.

It makes Tencent Ubisoft’s single biggest shareholder, with an overall stake of 11%, which could further increase to nearly 17%.

It also caps a difficult four-year period at Ubisoft, marked by a succession of delays in new video games and allegations of sexual harassment that led to a revamp of its top management.

The French video game firm has long been seen as a takeover target, although the founding Guillemot family beat off a raid by media group Vivendi in 2015.

Traders and analysts said the Tencent deal was favorable for Ubisoft but removed the speculative appeal of its shares.

The deal makes Tencent part of a shareholder pact with the Guillemot family. The agreement involves Tencent’s acquisition of 49.9% of Guillemot Brothers limited—the holding firm that owns the bulk of the family’s 15% stake in the video game firm—with just 5% voting rights.

Tencent will not sell its shares for five years, and the family will have a pre-emptive right to buy them. Ubisoft also said Tencent pledged not to increase its direct stake in the video game firm by over 9.99% for eight years.