Ubisoft Shares Surge Following Tencent-Backed Gaming Spinoff Announcement

Ubisoft, the French video game publisher behind Assassin’s Creed, saw its shares jump 9% on Friday after announcing a major restructuring move.

The company revealed plans to spin off some of its biggest franchises into a new gaming subsidiary, with Chinese tech giant Tencent investing €1.16 billion ($1.25 billion) in the unit.

The newly formed subsidiary will house some of Ubisoft’s most successful franchises, including Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six. Tencent’s investment values the new entity at €4 billion ($4.3 billion)—more than double Ubisoft’s current market capitalization. The move comes as Ubisoft faces financial struggles and delays in key game releases.

Ubisoft CEO Yves Guillemot described the announcement as a “new chapter” for the company, with the goal of creating “evergreen, multi-platform game ecosystems.” The investment strengthens Tencent’s presence in the global gaming industry and makes it Ubisoft’s second-largest shareholder with a stake of just under 10%.

Ubisoft’s stock rose 11% in early trading before settling at a 9% gain. The deal was largely welcomed by investors, who had been seeking clarity on Ubisoft’s future strategy amid declining revenues and game delays.

However, analysts at TD Cowen raised concerns that while the spinoff highlights the value of Ubisoft’s top franchises, it could introduce “additional complexity for investors” when evaluating the company. They also noted that the remaining Ubisoft business may struggle in a market where dominant franchises increasingly control player spending.

Piers Harding-Rolls, research director at Ampere Analysis, pointed out that Tencent will likely influence cross-platform expansion, particularly in mobile and PC gaming, where it has significant expertise.

Despite the stock boost, Ubisoft continues to face challenges. In February, the company reported a 52% drop in net bookings for its fiscal third quarter, and recent high-profile releases like Assassin’s Creed Shadows and Star Wars Outlaws have faced delays or underperformed expectations.

Ubisoft stated that proceeds from the Tencent-backed investment will help it focus on developing its other marquee titles, including Tom Clancy’s Ghost Recon and The Division.

With input from CNBC and BBC.