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Chinese Game Company Tencent Wants To Become Majority Share Holder In Ubisoft

Tencent hopes to expand its burgeoning gaming empire by increasing its ownership in Ubisoft with the long-term goal of becoming the company’s largest shareholder.

Tencent, a Chinese gaming business, has gained attention recently for its aggressive global market development. The business purchased a controlling stake in Supercell, the company behind Clash of Clans, for $8.6 billion in 2016. It also owns 9% of Frontier Developments, the company behind Elite Dangerous, and has investments in US video game studios Epic Games and Riot Games. Tencent also intends to pay an estimated $1.3 billion for Sumo Digital, the company that developed Crackdown 3.

Additionally, Tencent purchased a small share in the well-known Ubisoft studio. It appears that Tencent is dissatisfied with its meager 5 percent ownership position in the French company, though. According to reports, the largest gaming firm in China wants to raise its stake in Ubisoft with the long-term objective of becoming the company's largest shareholder.

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Four unnamed individuals recently came forward with details on the ongoing sale, according to Reuters. They claim that Tencent is in talks with the Guillemot family, who founded Ubisoft and currently hold 15% of the business. In contrast to the 66 euros ($67.59) per share they paid in 2018 to purchase their existing 5% ownership in Ubisoft, Tencent is allegedly offering 100 euros ($101.84) for each share. Tencent is also aiming to buy more Ubisoft shares from private investors, who collectively own 80% of the company's equity.

Tencent and the Guillemots have yet to finish their agreement, which may be open to revision, said a person familiar with the discussions. It's also unknown how many Ubisoft shares Tencent is willing to purchase or what proportion of the company's equity it expects to ultimately acquire. A source did point out that Tencent is offering far more than Ubisoft's present stock values in order to stave off competition. Senior officials from Tencent allegedly traveled to France to speak with the Guillemot family, who have previously resisted bids to acquire Ubisoft.

Tencent's international growth may be influenced in part by domestic forces. Tencent's overseas revenue increased by 4% last quarter, outpacing its domestic sales by 1%. The corporation is also having issues with Chinese regulators, who last year blocked the issuance of new gaming licenses. The prohibition was lifted in April, but Tencent has still not received any fresh permits from the Chinese government. It seems sense given that situation that Tencent could wish to widen its boundaries.

Source: Reuters

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