After years of taking a beating and even speculation as to whether Ubisoft could collapse, the embattled French publisher is creating a new spin-off company dedicated to its three biggest IP: Assassin’s Creed, Rainbow Six and Far Cry.
There had been reports prior from Bloomberg that Ubisoft was considering a move like this. People speculated that it would be a way for the Guillemot family to retain control of their biggest IP should Ubisoft fold, or that it could be the first step in Ubisoft selling off some of its IP.
Now, though, we know for sure that Ubisoft is indeed creating a new company. Not only that, but Ubisoft investor Tencent will also play a part in this new venture to the tune of a €1.16bn stake, equating to roughly 25%.
According to Ubisoft, they are valuing the spin-off company at €4bn, which is considerably more than Ubisoft’s current market valuation of €1.7.
“Today Ubisoft is opening a new chapter in its history,” Ubisoft CEO Yves Guillemot wrote. “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.”
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.”
As for Ubisoft itself, it 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.”
That leaves a lot of IP that Ubisoft does not specifically mention , potentially lending credence to the idea that Ubisoft will seek to sell off some of its IP.
Ubisoft’s press release also details the following provisions relating to Tencent’s involvement:
“A 5-year lock-up undertaking on New subsidiary shares held by Tencent, unless Ubisoftno longer owns a majority of New subsidiary voting rights and share capital
– Ubisoft may not cease to hold a majority of New subsidiary voting rights and share capitalfor a 2-year period
– 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 ofTencent, and drag-along right to the benefit of Ubisoft (subject to certain conditions)
– 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.