Tencent Is Not Buying Ubisoft But It Is Investing In It

I am talking about how Tencent is not buying Ubisoft but investing with them instead.

Tencent Ubisoft Investment

A recent rumor that was making rounds on the internet was that the Chinese company Tencent would buy Ubisoft. But now we know Tencent is not buying Ubisoft, just striking a deal with them. We have confirmation that this is not what is happening, but it is not entirely untrue either.

So it is a good idea to look at the specifics of this deal to see what is happening and how it will affect games in the future.

What Is Tencent?

It is a good idea to go over what Tencent is so you can get a better idea of how the deal will affect Ubisoft. Simply put, Tencent is a Chinese technology company with many interests. It lists itself as an Internet and technology company.

Many of its interests and services reinforce this point and focus for the company. They have interests in everything from the internet hard way to music and even have some investment in future technologies like A.I. and various other interests.

So why do they want to invest in Ubisoft? Because they have been investing in many video game companies, Ubisoft is one of the largest ones they could do that with.

According to an article from the BBC, the company owns a significant gaming stake as they have invested in Fortnite and PUBG. They have already invested in Ubisoft, so this recent news is more of an expansion. This investment also seems to apply to game support as they have also invested in discord.

So with better knowledge, we can move forward to what the deal between these two companies will mean for both Ubisoft fans and gaming in general after this happens.

What Was The Original Rumor?

AC Valhalla Ubisoft
AC Valhalla

The original rumor was that Tencent would buy Ubisoft outright and have a controlling interest. While we know now that this is not quite the case of what will happen, it was enough to set the internet ablaze. So many people were concerned with what an absolute buyout would mean and how it would affect their games. This public backlash is most likely why they decided to disclose the nature of the deal so they wouldn’t start some kind of panic.

This better explanation sheds light on many things regarding the deal setup, while gamers also seem to calm down. Of course, there has been a wide variety of reactions, but we all go over that later.

What Is The Investment?

So with the revelation that Tencent is not buying Ubisoft and specifics of the deal revealed to us by Stephen Tolio over Twitter, we have learned that Tencent is not buying Ubisoft outright. Instead, the company will buy a significant stake in Ubisoft’s parent company Guillemot Bros. the deal allows them to buy up to 49.9 percent in Guillemot Bros, which is why they did this is that it owns the most significant stake in Ubisoft.

This deal was only reached with a series of specifics that both companies had to agree to. These were necessary for them to come to this deal.

What Are The Specifics Of The Purchasing Agreement?

Rainbow 6 Extraction
Rainbow 6 Extraction

The agreement included a few exciting provisos that Tencent must abide by to complete the deal. The first of these was that despite having such a significant investment in the company, they would not be given board seats. This restriction means they would have no voting power or ability to make decisions in Ubisoft. This lack of voting power also includes veto power so that they will be a non-entity regarding Ubisoft’s direction and choices.

It is also important to note that another aspect of the deal was that Guillemot Bros would remain in complete control. There is a ceiling on how much stock Tencent would get, and they wouldn’t be allowed to buy anymore.

This stock purchasing limit would leave Guillemot Bros in complete control of the company and its direction. There is also a proviso that the company cannot sell the stock for five years after the deal goes through.

The last essential part of the deal would be that Tencent would have to give Guillemot Bros a loan. This loan was given so the company could restructure its debt and streamline the process of getting rid of it. This loan and refinancing benefit might be one of the most significant reasons that G.B. approved such a large buyout.

The deal’s last part states that Tencent will receive the right to distribute several Ubisoft games on mobile. In addition, they would also have the right to distribute Ubisoft P.C. games in China. This new hardware and geographic release is a mutually beneficial part of the deal for both parties as it will mean higher profits for both. Not to mention that it expands the reach and reception of Ubisoft games even further.

What Has Been The Audience’s Reaction?

AC Valhalla Viking
AC Valhalla

So as one might imagine, there is quite a bit of fan feedback to a major deal like this. While I wouldn’t usually cover the audience’s feedback, it is relevant here. One is because this is a publicly-traded company, and audience confidence can affect it. Two, because this doesn’t just affect one game in the Ubisoft library but the reception to the library as a whole.

The initial reaction was not overwhelmingly positive when the leak came out. Ubisoft may not be one of the highest ranked companies right now among gamers, but a takeover was less appealing. So there was at least a mellowing effect when the specifics came to light, but it still places people on different sides.

Some think this is bad as air signifies a hostile takeover of Ubisoft and will result in poorer games. Others seem to see it differently and don’t mind the takeover, seeing it as a way for Ubisoft to undergo the necessary funding for future games. Most companies often undergo a process of getting investors to refinance, and this just makes it a fact of life.

I think many of these reactions are tied to the perception of the first rumor. Most negative comments are tied to this rather than the deal itself.

So as you can tell, Tencent is not buying Ubisoft, but it is still a vital deal in the gaming industry.

What are your thoughts on the subject matter and how it will impact the gaming industry? We would love to hear them in the comments section down below.

While you are here, why not check out our article on the new Silent Hill game leak.

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