Buying Ubisoft Taught Me a Costly Lesson

Ubisoft (OTC: UBSFY) is simply a France-based video crippled steadfast known for franchises including Assassin's Creed, Rainbow Six, and Far Cry. The institution was erstwhile 1 of the astir almighty players successful the gaming industry, but it's suffered an unthinkable autumn from grace.

I purchased shares of the institution successful 2022 amid the backdrop of an intensifying marketplace for video crippled acquisitions. Early successful January of that year, Take-Two announced that it would beryllium acquiring mobile games steadfast Zynga astatine a important premium. Soon after, Microsoft announced that it was buying Activision Blizzard -- erstwhile again astatine a important premium.

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In February 2022, Ubisoft CEO Yves Guillemot said that the company's committee of directors was unfastened to reviewing buyout offers if they arrived. In April, the institution was reportedly attracting meaningful buyout interest. What happened adjacent coiled up being a catastrophe for shareholders.

News deed successful September 2022 that Chinese media conglomerate Tencent was expanding its involvement successful Ubisoft. The quality initially prompted a important popular for the French publisher's stock price, but the devil was successful the details. While archetypal reports stated that Tencent was investing 300 cardinal euros successful Ubisoft, it turned retired that the Chinese institution was really investing the wealth successful a holding institution for Ubisoft banal owned by Guillemot and his family.

In different words, nary shares of Ubisoft were really purchased by Tencent connected the unfastened marketplace successful the transaction. Making matters worse, the woody came with further stipulations. As portion of the deal, Tencent was prevented from expanding its involvement supra the near-10% level it had already reached. The statement besides gave Tencent the close of archetypal refusal successful the lawsuit that different suitor was funny successful acquiring Ubisoft.

The woody efficaciously killed immoderate extracurricular involvement successful a imaginable acquisition of Ubisoft from different parties, and it lone got worse from there. Subsequent years saw the company's astir palmy franchises neglect to thrust growth, and astir of the company's different properties continued to suffer relevance.

In March 2025, Ubisoft announced that it was spinning disconnected its astir palmy franchises (Assassin's Creed, Far Cry, and Rainbow Six) into a caller subsidiary -- Vantage Studios. Along with the news, the institution besides announced that Tencent had invested 1.16 cardinal euros to summation a 25% involvement successful the caller business. While that concern seemingly valued Ubisoft's biggest properties, and truthful the institution arsenic a whole, astatine a important premium, it corresponded with different agelong of large sell-offs for the stock. Tencent had accrued its stock successful Ubisoft's astir invaluable properties and circumvented its erstwhile statement not to summation its involvement successful the halfway institution supra 10%, and the gaming company's shares got deed hard contempt a large superior injection and what looked similar affirmative valuation news.