Tencent Holdings and the Ubisoft Guillemot family are considering a joint venture that could include certain Ubisoft assets to increase the value of the French video game company. According to sources familiar with the situation, the discussion is being conducted behind closed doors, Bloomberg reports.
As part of a potential deal, Tencent could gain a stake in the new structure and greater control over some of Ubisoft's intellectual property rights. This will help the Chinese tech giant expand its presence in the video game market outside of China and will also help Ubisoft's value to grow amid a decline in its shares.
The sources note that the parties have not yet made any final decisions on which assets may be included in the joint venture and how to value them.
A Tencent representative declined to comment on the situation. At the same time, Ubisoft referred to its previous announcement of January 9, in which it announced the appointment of advisors to consider various options for increasing the company's value. Ubisoft said it would not comment further until the process is completed.
Tencent and the Guillemot family have been in talks with advisors to stabilize Ubisoft since last year after a significant drop in the value of its shares. Among the options under consideration was a buyout of the company.
As of March 31, Tencent and the Guillemot family owned 25.4% of Ubisoft's shares and controlled 29.6% of the votes, according to the company's annual report.
Ubisoft's shares have fallen by almost 50% over the past 12 months, reducing the company's market value to about $1.6 billion. The company has also faced delays in its next big game, Assassin's Creed Shadows, which was originally scheduled for release in November but was postponed to February. Last week, Ubisoft again postponed the game's release until March 20.