Ubisoft (UBSFY +0.97%) is a France-based video game publisher known for franchises including Assassin's Creed, Rainbow Six, and Far Cry. The company was once one of the most powerful players in the gaming industry, but it's suffered an incredible fall from grace.
I purchased shares of the company in 2022 amid the backdrop of an intensifying market for video game acquisitions. Early in January of that year, Take-Two announced that it would be acquiring mobile games publisher Zynga at a substantial premium. Soon after, Microsoft announced that it was buying Activision Blizzard -- once again at a substantial premium.
Image source: Getty Images.
In February 2022, Ubisoft CEO Yves Guillemot said that the company's board of directors was open to reviewing buyout offers if they arrived. In April, the company was reportedly attracting meaningful buyout interest. What happened next wound up being a disaster for shareholders.
Investors didn't see a benefit
News hit in September 2022 that Chinese media conglomerate Tencent was increasing its stake in Ubisoft. The news initially prompted a significant pop for the French publisher's share price, but the devil was in the details. While initial reports stated that Tencent was investing 300 billion euros in Ubisoft, it turned out that the Chinese company was actually investing the money in a holding company for Ubisoft stock owned by Guillemot and his family.
OTC: UBSFY
Key Data Points
In other words, no shares of Ubisoft were actually purchased by Tencent on the open market in the transaction. Making matters worse, the deal came with additional stipulations. As part of the deal, Tencent was prevented from increasing its stake above the near-10% level it had already reached. The arrangement also gave Tencent the right of first refusal in the event that another suitor was interested in acquiring Ubisoft.
The deal effectively killed any outside interest in a potential acquisition of Ubisoft from other parties, and it only got worse from there. Subsequent years saw the company's most successful franchises fail to drive growth, and most of the company's other properties continued to lose relevance.
In March 2025, Ubisoft announced that it was spinning off its most successful franchises (Assassin's Creed, Far Cry, and Rainbow Six) into a new subsidiary -- Vantage Studios. Along with the news, the company also announced that Tencent had invested 1.16 billion euros to gain a 25% stake in the new business. While that investment seemingly valued Ubisoft's biggest properties, and therefore the company as a whole, at a substantial premium, it corresponded with another stretch of big sell-offs for the stock. Tencent had increased its share in Ubisoft's most valuable properties and circumvented its previous agreement not to increase its stake in the core company above 10%, and the gaming company's shares got hit hard despite a big capital injection and what looked like positive valuation news.
Today, Ubisoft has a market capitalization of just $647 million -- and the company's share price is down 90% since the beginning of 2022. Owning the stock was a costly reminder of the dangers that come with betting on buyouts -- and what can happen when management makes deals that run contrary to the interest of the broader shareholder base.
