Ubisoft shares skyrocket 33% after report Tencent, Guillemot family considering buyout

Shares of French video game publisher Ubisoft surged more than 30% on Friday after a media report that Tencent and the firm's founding Guillemot family are considering a potential buyout of the company.

Bloomberg News reported Friday that Tencent and the Guillemot family, which are both minority shareholders of Ubisoft, are considering a buyout among other options after the company lost more than half its market value this year.

One possibility currently being discussed is a combination of Tencent and the Guillemot family partnering up to take the company private, the business news agency reported, citing people familiar with the matter.

Shares of Ubisoft spiked 33.5% by the market close Friday following publication of the report.

Ubisoft declined to comment on the Bloomberg News report. Tencent was not immediately available for comment when contacted by CNBC Friday.

The European gaming giant, which is most known for its popular "Assassin's Creed" franchise, has been in a state of uncertainty lately amid investor concerns over its lackluster triple-A games pipeline and the overall management of the company.

Last week, Ubisoft said it was postponing the release of the next title in its popular games series, "Assassin's Creed Shadows," by three months to Feb. 14, 2025, after "softer than expected" demand for the firm's "Star Wars Outlaws" game, which launched in August.

Ubisoft also cut its net bookings guidance for its 2025 fiscal year to around 1.95 billion euros, below the 2.32 billion euros Ubisoft reported for its 2024 fiscal year.

Tencent, which owns a roughly 10% stake in Ubisoft, is one of China's largest technology firms. The company, best known in China for its strong market share in gaming, is behind the Chinese multiplayer online battle arena game "Honor of Kings" which it publishes under its TiMi Studio Group publisher arm.

Speculation over a potential takeover comes as Ubisoft shares are trading at decade lows. Last week, AJ Investments, an activist investor with a less than 1% stake in Ubisoft, said it had amassed the support of 10% of Ubisoft's shareholder base to push for changes at the company.

In an open letter last Thursday, the private equity firm said it had engaged "industry experts" as potential replacements for the current Ubisoft management to realize a turnaround strategy at Ubisoft. It called for Ubisoft to sell itself to private equity groups or Tencent.

Following Ubisoft's guidance cut and a performance in the second quarter that "fell short" of the company's expectations, CEO Yves Guillemot announced that the firm's executive committee would launch a review to "further improve" execution.

Along with delays to its premier title, Ubisoft is also grappling with a games industry-wide slump. The global games market is set to grow only 2.1% year-over-year in 2024, according to research firm Newzoo — no where near the surging growth levels witnessed during the 2020 and 2021 Covid-19 pandemic years.

James Lockyer, technology research analyst at U.K. investment bank Peel Hunt, told CNBC earlier this week that part of the problem for game publishers today is that gamers are devoting more of their time to older games than to newer titles.

"More choice plus a cost-of-living squeezed wallet has meant consumers' cash has been spread more thinly, leading to revenues and ROIs [return on investment] of those games often coming out below expectations," Lockyer told CNBC via email.