Ubisoft establishes new subsidiary with €1.16 billion investment from Tencent

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Ubisoft has unveiled plans to create a new company focused on its popular franchises like ‘Assassin’s Creed’, ‘Far Cry’, and ‘Tom Clancy’s Rainbow Six’. This venture will be funded by a €1.16 billion investment from the Chinese corporation, Tencent. In return, Tencent will hold a 25% share in this subsidiary.

The new branch of our company will concentrate on creating “living game environments that can thrive across multiple platforms” and strive to enhance the depth and quality of solo storytelling, regularly expand multiplayer options with frequent content updates, offer free-to-play experiences, and incorporate additional social elements for a more engaging experience.

Following an earlier announcement in 2025 about examining diverse strategic possibilities, Ubisoft has decided upon a deal with Tencent after evaluating numerous interested parties. Finding this agreement to offer the highest value for their assets, Ubisoft endorsed the plan today.

Alongside establishing a new subsidiary, Ubisoft plans to foster the development of renowned series like Tom Clancy’s Ghost Recon and The Division, boosting the expansion of successful titles and utilizing groundbreaking technologies on select upcoming intellectual properties. They will also persist in providing advanced game engines and online services.

According to a statement from Yves Guillemot, Ubisoft’s co-founder and CEO, today marks the start of a fresh chapter in the company’s journey. As we speed up our transition, this move is crucial for altering Ubisoft’s operational structure, allowing us to be both adaptable and ambitious. Our goal is to construct robust game environments that can endure, cultivate strong, long-lasting brands, and develop new intellectual properties leveraging advanced and innovative technologies.

By establishing a separate entity specifically designed to drive the advancement of our three biggest franchises, we’re bringing clarity to the worth of our assets, reinforcing our financial stability, and setting an ideal environment for their sustained growth and achievement. We’ve also welcomed Tencent as a partial owner. This new subsidiary will be led by a distinct and self-governing team, with the primary goal of shaping these three brands into distinct ecosystems.

Guillemot announced, “Our aim is to construct a more streamlined organization, one where skilled teams will propel our brands forward, speed up the development of new franchises, and pioneer innovations in future technologies and services. This is all with the intention of producing games that delight players beyond their expectations, while generating superior value for our shareholders and other partners.

Martin Lau, Tencent’s president, expressed enthusiasm about deepening their partnership with Ubisoft through this investment. This move underscores our ongoing trust in Ubisoft’s innovative ideas and skilled team to maintain industry success. We perceive a great deal of potential for these franchises to develop into enduring evergreen game platforms, offering fresh gaming experiences to players.

Here is the full breakdown of the new subsidiary and deal with Tencent:

Relationship between the new subsidiary and Ubisoft Entertainment

  • The new subsidiary would include the teams developing the Tom Clancy’s Rainbow Six, Assassin’s Creed, and Far Cry franchises based in Montréal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia as well as the back-catalog and any new games currently under development or to be developed.
  • The new subsidiary would be granted by Ubisoft a worldwide, exclusive, irrevocable, perpetual license in respect of the intellectual property and similar proprietary rights owned or licensable by Ubisoft in relation to Tom Clancy’s Rainbow Six, Assassin’s Creed, and Far Cry in exchange for a royalty.

Main terms of the binding agreement with Tencent

  • Tencent would invest in the new subsidiary which is headquartered in France and 100% owned by Ubisoft immediately prior to the transaction. Specifically, at closing of the transaction, Tencent would invest a total amount of EUR1.16bn for an approximate 25% economic interest in the New subsidiary, that will be used to strengthen Ubisoft’s balance sheet by significantly reducing its consolidated net debt position, accelerate the Group’s transformation, and sustain growth of selected franchises. After closing of the transaction, the new subsidiary would remain exclusively controlled and consolidated by Ubisoft.
  • Conditions precedent to the transaction:
    • Issuance of a fairness opinion from Finexsi acting as independent expert.
    • Completion of the carve-out to create the new subsidiary.
    • Obtention of the necessary regulatory clearances
    • Ubisoft can unilaterally waive the issuance of the fairness opinion as a condition precedent.
  • Completion of the transaction is expected before the end of 2025.
  • The new subsidiary would have a dedicated leadership team, supervised by a Board of Directors, focused on enhancing creative vision and streamlining operations, with the authority to make swift, high-impact decisions across development, marketing, and distribution, to ensure these brands continue to evolve, attract new audiences, and deliver groundbreaking gaming experiences for years to come.
  • Tencent would benefit from customary minority protection rights as well as certain consent rights on the disposals of the important new subsidiary assets.
  • Other provisions in relation to Tencent’s shareholding in the New subsidiary notably include:
  • A 5-year lock-up undertaking on New subsidiary shares held by Tencent, unless Ubisoft no longer owns a majority of New subsidiary voting rights and share capital.
  • Ubisoft may not cease to hold a majority of New subsidiary voting rights and share capital for a 2-year period.
  • Customary share transfer provisions, including, a right of first refusal to the benefit of Ubisoft, a right of first offer to the benefit of Tencent, tag-along right to the benefit of Tencent, and drag-along right to the benefit of Ubisoft (subject to certain conditions).
  • Call option to the benefit of Ubisoft and put option to the benefit of Tencent in the event of certain change of control of Ubisoft approved by its Board of Directors—Exercise price will be the higher of (i) the fair market value of New subsidiary shares and (ii) the same EBIT multiple as that in the change of control transaction of Ubisoft; it being specified that for the call option there will be a specific minimum price protection during the first four years following closing of the transaction with Tencent.

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2025-03-27 22:47