Assassin’s Creed maker Ubisoft plunges 16% after Chinese giant Tencent ups stake

Tencent has increased its stake in French games maker Ubisoft, the company behind popular franchises like Assassin’s Creed. But analysts said this has effectively closed the door on a full takeover of the company.

Following a move by Chinese tech giant Tencent to increase its stake in the company, shares of the games developer plummeted.

A 49.9% stake in the company was invested by the two companies. 5% of the company is given to Tencent.

The majority of the Guillemot family's 15% stake in the company is held by Guillemot BrothersLimited.

In order to keep the company independent and protected from a takeover, the Guillemot brothers have fought hard.

The investment values the shares at 80 euros each, an 83% premium on Tuesday's closing price, giving it an indirect stake in the games developer.

Analysts said that the move effectively closes the door on a full takeover of the company by any party.

It appears that a full sale of the company to a strategic or financial buyer is not likely. In our opinion, this should be seen as a net negative for the company's stock price.

As a result of the deal, Tencent is able to increase its stake in the company from 4.5% to 9.99%. It won't be possible for Tencent to sell its shares for five years and it won't be able to increase its stake in the company for eight years. That precludes a full takeover of the firm.

The drama began in 2015 when Vivendi took a stake in the European gaming firm. The family wanted the company to remain independent.

Vivendi dropped its pursuit of the company after three years. A 5% stake in the games company was owned by the Chinese tech giant.

Sexual harassment allegations and a lack of new hit titles are some of the challenges facing the company.

This year has seen a flurry of deals in the video games space, particularly from Asian firms, that began with Microsoft's proposed $68.7 billion acquisition of a video game publisher in January, followed by Sony's takeover of a game publisher in February.

One of the world's largest gaming companies, based in Shenzhen, China, has grown into one of the world's largest gaming companies through acquisitions and investments in smaller studios.

Tougher regulation of gaming in China has led to expansion by NetEase and Tencent.

Assassin's Creed and Rainbow Six are some of the most popular games in the world. Details about upcoming games will be revealed on Saturday.

While it has helped companies it has invested in to run their own businesses, it has also offered a hand to expand titles into China and onto mobile.

Martin Lau said that the two companies will bring the most well-known franchises to mobile.