Ubisoft falls, Tencent deal dampens takeover hope

PARIS (Reuters) – Ubisoft fell on the Paris Stock Exchange on Wednesday morning after announcing a deal to raise its capital with China’s Tencent, in which many observers saw for the first time a halt to speculation about a possible takeover of the video game publisher.

Shares of Ubisoft shed 12.55% to €38.04 at 10:15 a.m., the biggest drop in the broad European Stoxx 600 index, which was down 0.53% on its own.

Thus, the name returns to the level of mid-May.

The agreement, unveiled late Tuesday, covers both Tencent’s purchase of a 49.9% stake in Guillemot Brothers Limited, the family-owned holding company that is the group’s largest shareholder, and an opportunity for the Chinese group to increase its direct stake in Ubisoft from 4.5%. % to 9.99%.

Tencent’s €300 million investment in the holding company was entered into based on a valuation of €80 per Ubisoft share. The level is significantly higher than the current price, but which leaves many analysts indifferent, for whom the agreement excludes, first of all, the possibility of a public offer to absorb the entire capital.

Today, that hypothesis seems “even less likely,” says Cowen & Co, which sees the Tencent deal as a positive for Ubisoft, but not for its stock price.

“The prospect of a takeover and battle for Ubisoft is gone,” notes Charles-Louis Planade, a respected partner at Midcap. “For Tencent (…) this is tantamount to sending a message to all other potential buyers that ‘it’s me’.”

For JPMorgan, “If Tencent can’t sell within five years and can’t increase its stake within eight years, Ubisoft could still be acquired, but without the backing of a Guillemot concert, it will be difficult.”

(Written by Marc Angrande, with Diana Mandia and Danilo Masoni)

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