Ubisoft shares surged on Friday following the company’s announcement of a strategic deal to spin off some of its best-selling franchises into a newly formed gaming subsidiary. Chinese tech giant Tencent is investing €1.16 billion ($1.25 billion) into the new entity.
The announcement led to an 11% jump in Ubisoft’s stock on Friday morning, before stabilizing at a 9% increase later in the day.
According to Ubisoft, the newly created unit will include some of its most renowned gaming franchises, such as Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six.
Ubisoft revealed that the new subsidiary will focus on developing long-term, multi-platform gaming ecosystems. Tencent’s investment values the spin-off at €4 billion, which is more than double Ubisoft’s current market capitalization.
The move comes as Ubisoft faces financial struggles and delays in key game releases. The company recently reported a 52% drop in fiscal third-quarter net bookings, partly due to underperforming titles.
“This spin-off highlights the value of Ubisoft’s top franchises while keeping Tencent from outright control,” said Piers Harding-Rolls, research director at Ampere Analysis, in a statement to CNBC. He added that Tencent will likely exert stronger influence in areas like mobile and PC gaming, where the company has extensive expertise.
Ubisoft’s latest release, Assassin’s Creed Shadows, debuted last week as the newest installment in its flagship franchise. The game has received generally positive reviews, securing an 82 average score on Metacritic.
With Tencent’s backing, Ubisoft aims to strengthen its position in the gaming industry, expand into new platforms, and revitalize its most successful franchises.
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