Tencent invests $1.25B in Ubisoft's new core games operating division

Core Insights - Tencent has invested $1.25 billion in a new Ubisoft subsidiary focused on major franchises like Assassin's Creed, Far Cry, and Tom Clancy's Rainbow Six, marking a significant step in Ubisoft's transformation strategy [1][2][11] - The new subsidiary aims to create evergreen game ecosystems and enhance the quality of narrative experiences, multiplayer offerings, and social features [3][10][22] Financial Overview - The transaction values the new subsidiary at a pre-money enterprise value of approximately €4 billion ($4.3 billion), with an expected average sales multiple of around four times for FY23-FY25E [5] - Tencent's investment of €1.16 billion ($1.25 billion) will secure a minority stake of about 25% in the new subsidiary, which will help strengthen Ubisoft's balance sheet and reduce its net debt [16][21] Strategic Developments - The new subsidiary will be dedicated to the development of the three major franchises and will operate with a dedicated leadership team to streamline operations and enhance creative vision [22][11] - Ubisoft plans to leverage disruptive technologies and focus on nurturing other iconic franchises while continuing to deliver high-quality production and online services [10][11] Governance and Control - The new subsidiary will remain under Ubisoft's exclusive control, with Tencent benefiting from customary minority protection rights and certain consent rights regarding asset disposals [17][23] - The transaction requires a fairness opinion from an independent expert and is expected to be completed before the end of 2025 [21][11]