Ubisoft’s $4 billion carveout sells Tencent a 25 percent stake in some of its biggest games

Tencent will invest $1.3 billion in a new entity controlling Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six.

Ubisoft is spinning off Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six into a subsidiary backed by Tencent, according to an announcement recently. The Chinese gaming giant will invest €1.16 billion (~$1.3 billion) for a 25 percent stake in the carveout, which will have a total value of about €4 billion (~$4.3 billion).

Ubisoft says the new entity will include the teams working on all three franchises, along with the publisher’s back catalog of games and new titles currently in development. It will work to improve the “quality of narrative solo experiences,” as well as “expand multiplayer offerings with increased frequency of content release.”

“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,” the company added.

The investment from Tencent values the new subsidiary at 4 billion euros, Ubisoft said, implying a 4x multiple based on its average sales from full-year 2023 to 2025.

Last year, Bloomberg reported that Tencent, which currently has a 10 percent stake in Ubisoft, was considering a buyout of the French game publisher. Ubisoft responded by saying it “regularly reviews all its strategic options.” The deal is expected to close this year.

“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,” Ubisoft co-founder and CEO Yves Guillemot, says in the press release.

“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,” Ubisoft said.

Assassin’s Creed Shadows launched on March 20 to a broadly positive reception. The Assassin’s Creed series has sold more than 200 million copies worldwide and, according to a Ubisoft earnings report published last year, generated about €4bn revenue in the decade up to 2024.