Ubisoft falls on the stock market, the agreement with Tencent limiting a takeover

Ubisoft fell on the Paris Stock Exchange on Wednesday after the announcement of an agreement on the rise in its capital of the Chinese Tencent, in which many observers first see a halt to speculation on a possible takeover of video game publisher.

Ubisoft action has closed to 36 euros, down 17.24%. This is the largest drop in the broad European Stoxx 600 index, itself in decline. The title thus falls back to its level of mid-May.

The agreement unveiled yesterday concerns both the purchase by Tencent of 49.9% of the capital of Guillemot Brothers Limited, the family holding company, the group’s largest shareholder, and the possibility given to the Chinese group to increase its direct stake in Ubisoft. from 4.5% to 9.99%.

Tencent’s investment of 300 million euros in the holding company was concluded on the basis of a valuation of 80 euros per Ubisoft share. A level well above the current price but which leaves many analysts cold, for which the agreement excludes above all the possibility of a takeover bid on all of the capital.

This hypothesis seems “even less likely” today, estimates Cowen & Co, which sees in the agreement with Tencent a positive element for Ubisoft but not for its share price. “The prospect of a takeover and that of a battle for Ubisoft have disappeared”notes Charles-Louis Planade, at Midcap Partners. “For Tencent (…), this amounts to sending a message to all other possible buyers saying ‘that one is me’”. For JPMorgan, “if Tencent can’t sell for five years and can’t increase its stake for eight years, Ubisoft can still be bought out, but it would be difficult without the support of the Guillemot concert”.