TENCENT(HK:00700) Zhong Guo Jing Ying Bao·2025-11-28 20:18Core Insights - Tencent has made a strategic investment of €1.16 billion (approximately ¥9.5 billion) in Ubisoft's subsidiary Vantage Studios, which is crucial for Ubisoft's transformation and debt relief [2][5][6] - The investment values Vantage Studios at €3.8 billion pre-money, with Tencent acquiring a 26.32% economic interest while Ubisoft retains full control [3][5] - This investment is part of a broader strategy to enhance Ubisoft's key IPs and strengthen its balance sheet, particularly in light of previous financial struggles and a hostile takeover attempt by Vivendi [2][7][8] Investment Details - Tencent's investment will help Ubisoft reduce its leverage and strengthen its balance sheet, addressing urgent debt repayment needs [6][12] - The funds will be used to repay approximately €286 million of term loans and Schuldschein bonds, as Ubisoft's net debt reached €1.15 billion with only €668 million in cash [6][12] - A shareholder agreement has been established, granting Tencent certain minority shareholder rights and a five-year lock-up period for its shares [3][5] Company Strategy - Vantage Studios aims to accelerate the development of Ubisoft's major IPs, including Assassin's Creed, Far Cry, and Rainbow Six, into billion-euro annual brands [3][12] - Ubisoft is transitioning to a "Creative Houses" model, with Vantage Studios being a key component of this new operational structure [12] - The company plans to reduce fixed costs by at least €100 million by the 2026-27 fiscal year, while also undergoing targeted restructuring [12][13] Historical Context - Tencent previously intervened in 2015 to help Ubisoft fend off a hostile takeover by Vivendi, which had acquired nearly 30% of Ubisoft's shares [7][9] - The ongoing partnership between Tencent and Ubisoft has included previous investments and collaborations, indicating a long-term strategic relationship [10][11] Recent Performance - Ubisoft's recent financial performance has shown signs of improvement, with a 39% increase in net bookings for Q2 2025, driven by strong sales of key titles [13] - Despite past struggles, the company is optimistic about its future, particularly with the new investment and strategic direction [11][12]