Artwork for Ubisoft’s upcoming “Assassin’s Creed Shadows” game.
John Keeble | Getty Images
Ubisoft shares surged on Friday after the French video game publisher announced a deal to spin out some of its best-selling franchises.
On Thursday, Ubisoft revealed plans to form a new gaming subsidiary, with Chinese technology giant Tencent investing 1.16 billion euros ($1.25 billion) into the unit.
The subsidiary will include Ubisoft’s best-known games brands, including Assassin’s Creed, Far Cry and Tom Clancy’s Rainbow Six, according to a press release.
Ubisoft shares jumped 11% Friday morning before paring gains later in the day to trade 9% higher.
The game maker said Thursday that its newly formed unit would “focus on building game ecosystems designed to become truly evergreen and multi-platform.”
The investment from Tencent values the new subsidiary at 4 billion euros, Ubisoft said. That’s more than double Ubisoft’s current market capitalization.
Investors were hoping for a move from Ubisoft to clear up uncertainty surrounding its future after a series of challenges faced by the firm in recent years.
Ubisoft has been plagued by various issues, from financial struggles to delays to some of its key games — including its most recently released Assassin’s Creed Shadows title.
In February, the firm reported a 52% drop in fiscal third-quarter net bookings, beset by underperformance of some of its key games.
The structure of the Tencent-backed spinoff is “innovative and aims to highlight the value of Ubisoft’s top franchises, while also not ceding overall control to Tencent on paper,” Piers Harding-Rolls, research director of games at Ampere Analysis, told CNBC via email.
“However, to get the most from these franchises, I expect Tencent to have a stronger influence in cross-platform expansion especially in areas where it has deep expertise such as mobile and PC gaming and to hold more influence generally,” he added.
TD Cowen’s Doug Creutz and Mei Lun Quach said they don’t believe the deal will solve lingering issues impacting the remaining part of Ubisoft that will continue to exist after the transaction completes.
The spinoff will lead to “additional complexity for investors attempting to value the company,” they said in a note Thursday, adding it “appears to be driven by the Guillemot family’s desire to retain effective control of the Ubisoft parent.”
The investment bank’s analysts added that “it’s not clear to us that the ‘everything else’ remaining has significant value in a market where the big franchises are becoming ever more dominant.”
The deal is expected to close before the end of 2025, pending all necessary regulatory clearances.
Ubisoft released its newest title Assassin’s Creed Shadows, the latest installment in Ubisoft’s top game franchise, last week.
The game secured generally positive reviews, getting an average reviewer score of 82 on review aggregation site Metacritic.
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