Ubisoft splitting up. Creates new subsidiary with Tencent to manage Assassin's Creed, Far Cry & Rainbow Six

[Dcubed]

https://staticctf.ubisoft.com/8aefmxkxpxwl/1uPFqvuRRej3UoemTIgVLH/18f1d055777e1b39a3f79a951452b9e1/2025.03.27_-_Press_Release_vfinal.pdf

Quote

PARIS – March 27, 2025 – Today, Ubisoft announced that it is accelerating its transformation by taking an important step in rapidly evolving its operating model with the creation of a dedicated subsidiary based on its Assassin's Creed®, Far Cry®, and Tom Clancy's Rainbow Six® brands. Following the formal and competitive selection process initiated by the Group earlier this year, Tencent's will invest €1.16bn for a minority stake in the new subsidiary. This new subsidiary will focus on building game ecosystems designed to become truly evergreen and multi-platform. Backed by greater investment and boosted creative capacities, it will drive further increases in quality of narrative solo experiences, expand multiplayer offerings with increased frequency of content release, introduce free-to-play touchpoints, and integrate more social features.

This transaction values the entity at a pre-money Enterprise Value of c.€4bn, implying a FY23-FY25E average sales multiple of around 4x. It highlights the strong value of Ubisoft's IPs, significantly reinforces its balance sheet, and enables the company to continue its efforts to become a more agile organization, unleash the full creative potential of its teams and better align its resources with the constantly evolving expectations of players.

The binding agreement with Tencent follows the formal and competitive process in exploring and assessing different strategic options announced earlier this year. Based on the careful consideration of several expressions of interest received from diverse parties, and its duty to act in the best interests of all Ubisoft stakeholders, the Board of Directors, upon recommendation from the ad hoc Committee, determined that this transaction crystalized the best value for Ubisoft's assets and unanimously approved the proposed transaction on March 27, 2025. The Board of Directors has, upon ad hoc Committee recommendation, appointed Finexsi acting as independent expert in view of the issuance of a fairness opinion.

In parallel to the creation of this new entity, Ubisoft will focus on nurturing the development of iconic franchises including Tom Clancy's Ghost Recon® and The Division®, accelerating the growth of top performing titles and leveraging disruptive technologies on selected new IPs, while continuing to deliver state-of-the-art production game engines and online services. More details on the Group's future operating model will be shared at a later stage.

"Today Ubisoft is opening a new chapter in its history," said, Yves Guillemot, Co-Founder and Chief Executive Officer. "As we accelerate the company's transformation, this is a foundational step in changing Ubisoft's operating model that will enable us to be both agile and ambitious. We are focused on building strong game ecosystems designed to become evergreen, growing high-performing brands and creating new IPs powered by cutting-edge and emerging technologies."

"With the creation of a dedicated subsidiary that will spearhead development for three of our largest franchises and the onboarding of Tencent as a minority investor, we are crystalizing the value of our assets, strengthening our balance sheet, and creating the best conditions for these franchises' long-term growth and success. With its dedicated and autonomous leadership team, it will focus on transforming these three brands into unique ecosystems."

Guillemot concluded, "We are committed to building a sharper, more focused organization-one where talented teams will take our brands to the next level, accelerate the growth of emerging franchises, and lead innovation in next-generation technologies and services, all with the goal of delivering enriching, memorable games that exceed players' expectations, and create superior value for our shareholders and other stakeholders."

Martin Lau, President of Tencent, said "We are excited to extend our longstanding partnership with Ubisoft through this investment, which reflects our continued confidence in Ubisoft's creative vision and exceptional talent to drive sustained success in the industry. We see the immense potential for these franchises to evolve into long-term evergreen game platforms and create engaging new experiences for gamers."

Relationship between the new subsidiary and Ubisoft Entertainment:
o The new subsidiary would include the teams developing the Tom Clancy's Rainbow Six, Assassin's Creed and Far Cry franchises based in Montréal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia as well as the back-catalog and any new games currently under development or to be
developed.
o The new subsidiary would be granted by Ubisoft a worldwide, exclusive, irrevocable, perpetual license in respect of the intellectual property and similar proprietary rights owned or licensable by Ubisoft in relation to Tom Clancy's Rainbow Six, Assassin's Creed and Far Cry in exchange for a royalty.

Main terms of the binding agreement with Tencent:
o Tencent would invest in the new subsidiary which is headquartered in France and 100% owned by Ubisoft immediately prior to the transaction. Specifically, at closing of the transaction, Tencent would invest a total amount of EUR1.16bn for an approximate 25% economic interest in the New subsidiary, that will be used to strengthen Ubisoft's balance sheet by significantly reducing its consolidated net debt position, accelerate the Group's transformation, and sustain growth of selected franchises. After closing of the transaction, the new subsidiary would remain exclusively controlled and consolidated by Ubisoft.
o Conditions precedent to the transaction:
− Issuance of a fairness opinion from Finexsi acting as independent expert
− Completion of the carve-out to create the new subsidiary
− Obtention of the necessary regulatory clearances
Ubisoft can unilaterally waive the issuance of the fairness opinion as a condition precedent.
o Completion of the transaction is expected before the end of 2025.
o The new subsidiary would have a dedicated leadership team, supervised by a Board of Directors, focused on enhancing creative vision and streamlining operations, with the authority to make swift, high-impact decisions across development, marketing, and distribution, to ensure these brands continue to evolve, attract new audiences, and deliver groundbreaking gaming experiences for years to come.
o Tencent would benefit from customary minority protection veto rights as well as certain consent rights on the disposals of the important new subsidiary assets
o Other provisions in relation to Tencent's shareholding in the New subsidiary notably include:
o A 5-year lock-up undertaking on New subsidiary shares held by Tencent, unless Ubisoft no longer owns a majority of New subsidiary voting rights and share capital
o Ubisoft may not cease to hold a majority of New subsidiary voting rights and share capital for a 2-year period
o Customary share transfer provisions, including, a right of first refusal to the benefit of Ubisoft, a right of first offer to the benefit of Tencent, tag-along right to the benefit of Tencent, and drag-along right to the benefit of Ubisoft (subject to certain conditions)
o Call option to the benefit of Ubisoft and put option to the benefit of Tencent in the event of certain change of control of Ubisoft approved by its Board of Directors – [Exercise price will be the higher of (i) the fair market value of New subsidiary shares and (ii) the same EBIT multiple as that in the change of control transaction of Ubisoft; it being
specified that for the call option there will be a specific minimum price protection during
the first 4 years following closing of the transaction with Tencent.

This new subsidiary will be worth €4 Billion (With Tencent contributing €1.2 Billion of that money), and will specifically manage the Assassin's Creed, Far Cry, and Tom Clancy's Rainbow Six brands going forward.

A lifeline for Ubisoft for now, but I can't help but feel that this is the beginning of the end, as Tencent takes over the company... Especially since this new subsidiary will effectively contain the majority of Ubisoft's value as a whole...

Edited Thursday at 06:04 PM by Dcubed

[Hero-of-Time]

Yeah, they are pretty much done. Such as shame because they have some great IP under their belts but they have squandered them over the past 10 years or so.

Saying that, the consumer is to blame as well. The recent Prince of Persia game was fantastic and very reminiscent of the old Ubisoft but sadly nobody bought the thing.

[Dcubed]

It's interesting that this new Tencent subsidiary will only have access to these three specific IP.  I wonder if the Guillemots are planning to sell this subsidiary to Tencent, while they maintain control of the rest of Ubisoft's IP?

I can imagine that their other IP have some sentimental value to the Guillemots; and that they'd want to keep at least some of their IP to themselves; while offloading the massive 20,000+ people that they need to keep on their payroll.

Edit: We have an internal memo released by Yves himself regarding this new subsidiary...

Quote

"Hello everyone,

I'm pleased to share an important announcement that will mark a milestone in Ubisoft's history.

Following a process to review different strategic options for Ubisoft's future, we have just signed an exceptional agreement with one of our trusted shareholders, Tencent, with whom we have a solid relationship.

Their €1.16 billion investment will benefit all of Ubisoft. We will be able to firmly take back control of our future and renew with the serenity needed to create the best games.

The terms of this partnership are straightforward: we will establish a dedicated subsidiary within Ubisoft that will bring together our three most powerful franchises: Assassin's Creed, Rainbow Six and Far Cry. This subsidiary will gather the teams working on these brands, primarily in the studios of Montreal, Quebec City, Sherbrooke, Saguenay, Barcelona, and Sofia. Tencent will be a 25% shareholder of this new subsidiary, with the aim of boosting these franchises so they become undisputed global icons.

This historic agreement is above all a recognition of the extraordinary work you have been doing for years: the value of these three brands directly reflects your individual and collective talent and efforts, which have allowed us to create these beloved franchises.

This investment will also give us the means to accelerate the changes we've been discussing for several months across the group – changes that many of you have been longing for, as revealed by the Ubisoft XP survey. These changes are in line with the initiatives that Marie-Sophie has been sharing recently, which aim to put the creation of unique games and player satisfaction back at the heart of our daily work. This is what will enable us to return to a higher level of profitability.

This announcement comes at a pivotal time, after the very positive reception of Assassin's Creed Shadows and the excitement sparked by the announcement of Rainbow 6 Siege X, of which we can be very proud.

I want to express my deepest gratitude for your resilience, tenacity, courage, and creativity – all the qualities that make Ubisoft a truly unique company and that helped us overcome a challenging period over the last few years.

The coming months will be dedicated to shaping our next chapter. Of course, this new step in our transformation will raise many questions, including on an individual level. We are committed to keeping you regularly informed, answering your questions, and providing visibility on the next steps.

I hope you can join the global livestream that will be held tomorrow at 3:30 p.m. CET during which I will share a few words with you. You'll receive an invitation shortly.

See you tomorrow, and thank you again,

Yves"

 

Edited Thursday at 06:16 PM by Dcubed

[Julius]

42 minutes ago, Hero-of-Time said:

Saying that, the consumer is to blame as well. The recent Prince of Persia game was fantastic and very reminiscent of the old Ubisoft but sadly nobody bought the thing.

I agree to an extent – but, like you say, similar to other IP of theirs, it's the absolute mismanagement of the IP by Ubisoft which I think did that game in.

Botched the revival of the IP with a Sands of Time remake which is now stuck in development hell after a terrible first showing; released that roguelike Prince of Persia in early access; then "actually" came back with Lost Crown, which I don't think did nearly enough to differentiate itself on the surface from other games in an INCREDIBLY stacked genre.

It also then wasn't backed by them, that game came and went very quickly, yet Outlaws – one of the biggest AAA fumbles of an IP, I mean it's open world Star Wars game for crying out loud, how do you fumble that? – got a marketing budget which likely dwarfed the production budget of anything Prince of Persia we've seen in the last 5 years. Hell, it probably dwarfed all three projects combined! 

One of those rare instances in this industry where I think they've reaped what they sowed  talking about the big wigs when I'm saying that, obviously; 19000+ people employed and I don't want to imagine how they're feeling right now after getting this update. 

Edited Thursday at 06:50 PM by Julius