Tencent and Ubisoft Founders Explore Privatization Amid Turbulent Times

In a move that could reshape the gaming industry, the founders of Ubisoft and the Chinese conglomerate Tencent, which already owns a significant stake in the French gaming giant, are reportedly considering teaming up to take Ubisoft private. This potential partnership comes as Ubisoft has faced a tumultuous year, with its market value plummeting by more than half.

Stabilizing Ubisoft: A Strategic Alliance in the Making?

Exploring Privatization Options

According to Bloomberg's sources, Tencent and the Guillemot family, the founders of Ubisoft, have been in discussions with advisers to explore ways to stabilize the company. One of the possibilities being considered is a joint effort to take Ubisoft private, though the talks are still in the early stages, and there is no guarantee that they will lead to any concrete action.The potential partnership between Tencent and the Guillemot family is not the only option being explored. The two parties are also considering other alternatives to address Ubisoft's current challenges, as the company's share price has dropped to its lowest point in nearly 11 years.

Addressing Ubisoft's Challenges

Ubisoft's recent struggles can be attributed to a number of factors, including the delayed release of Assassin's Creed Shadows and the disappointing launch performance of Star Wars Outlaws. These setbacks have contributed to the company's declining market value, prompting a minority investor, AJ Investments, to call for strategic and structural changes.In an open letter, AJ Investments urged Ubisoft's management to consider taking the company private or allowing it to be sold to a strategic investor. The hedge fund also recommended that Ubisoft implement a comprehensive cost reduction program, optimize staffing levels, increase its focus on core intellectual properties, and potentially replace current CEO Yves Guillemot.

Tencent's Involvement and Potential Implications

Tencent's involvement in the potential privatization of Ubisoft is particularly noteworthy, as the Chinese conglomerate already owns around 10% of the French gaming company. This existing stake could provide a solid foundation for a deeper partnership or a takeover bid.The collaboration between Tencent and the Guillemot family could have far-reaching implications for the gaming industry. Tencent's vast resources and global reach, combined with Ubisoft's renowned game development expertise, could create a formidable force in the market. However, any such move would likely face scrutiny from regulators and industry observers, who may be concerned about the potential consolidation of power and the impact on competition.

Navigating Uncertain Times

The reported discussions between Tencent and the Guillemot family come at a critical juncture for Ubisoft. The company's recent setbacks have highlighted the need for strategic changes, and the potential privatization could provide the stability and resources necessary to weather the current storm.As the gaming industry continues to evolve, the outcome of these discussions could have significant implications for Ubisoft, Tencent, and the broader gaming landscape. Industry analysts and investors will be closely monitoring the situation, eager to see how this potential alliance unfolds and how it might shape the future of the industry.