The Ubisoft logo is displayed at the European Brand Licensing Show at ExCel in London on September 24, 2024.
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Shares of French video game publisher Ubisoft Media reports said shares surged more than 30% on Friday Tencent The company’s founders, the Guillemot family, are considering acquiring the company.
Bloomberg reports Ubisoft’s minority shareholders Tencent and the Guillemot family are considering acquisitions and other options on Friday as the company has lost more than half its market value this year.
As of 3:41 pm London time, Ubisoft’s stock price surged more than 30%, before falling slightly to 28%.
Ubisoft declined to comment on the Bloomberg News report. Tencent was not immediately available for comment when contacted by CNBC on Friday.
The European gaming giant, best known for its popular Assassin’s Creed series, has been in a state of uncertainty lately as investors worry about its lackluster triple-A game series and the company’s overall management.
Last week, Ubisoft said it would delay the release of the next game in its hit franchise, Assassin’s Creed: Shadows, by three months to February 14, 2025. Guidance was lowered to approximately 1.95 billion euros, which is lower than the 2.32 billion euros announced by Ubisoft for fiscal 2024.
Tencent owns about 10% of Ubisoft and is one of China’s largest technology companies. The company is known for its strong gaming market share in China and is behind the Chinese multiplayer online arena game Honor of Kings, which is published by its TiMi Studio Group publisher.
Pressure from activists
Speculation on potential acquisitions is Ubisoft stock is currently at a decade low. Last week, activist investor AJ Investments, which holds less than 1% of Ubisoft shares, said it had received support from 10% of Ubisoft shareholders to push for changes at the company.
In an open letter last Thursday, the private equity firm said it had hired “industry experts” as potential replacements for Ubisoft’s current management as part of Ubisoft’s turnaround strategy. It called for Ubisoft to sell itself to a private equity group or Tencent.
After Ubisoft lowered its guidance and reported second-quarter results that “fell short of” the company’s expectations, CEO Yves Guillimot announced that the company’s executive committee would launch a review to “further improve” execution.
In addition to delays for its top games, Ubisoft is also facing a downturn in the gaming industry. The global gaming market is expected to grow by just 2.1% annually through 2024, well below the surge seen during the Covid-19 pandemic in 2020 and 2021, according to research firm Newzoo.
James Lockyer, a technology research analyst at British investment bank Peel Hunt, told CNBC earlier this week that part of the problem facing game publishers today is that players are spending more time playing older games than new ones.
Lockyer told CNBC via email: “More choices coupled with compressed living costs mean consumers’ cash allocations are thinner, resulting in revenue and return on investment for these games often being lower than expected.”
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