Investing.com -- Ubisoft Entertainment’s shares gained following a Bloomberg report on Wednesday detailing potential negotiations between Tencent (HK:0700) and the Guillemot family, which could lead to a new venture involving certain Ubisoft (EPA:UBIP) assets.
Barclays (LON:BARC) analysts suggested in a note that the development might signal increased value for Ubisoft’s holdings, though many questions remain unanswered. "This is not a take-out but it could imply more value for Ubisoft’s assets," said the bank.
The report highlights that discussions are ongoing regarding the creation of a new venture that would include some of Ubisoft’s intellectual properties.
Tencent could take a stake in this venture, potentially gaining more control over specific Ubisoft assets. The strategy does not suggest a complete takeover, but rather a collaborative approach that might enhance the value of Ubisoft’s portfolio.
Barclays points out several critical uncertainties: the stakes that Tencent, the Guillemot family, and other shareholders might hold in the new venture; whether Tencent would inject cash to secure a larger stake, which could reduce Ubisoft’s debt; and the overall valuation implications for Ubisoft.
Additionally, the analysts question how Tencent’s increased control over certain intellectual properties might boost their success and value.
“If Tencent has more control over some of Ubisoft’s IPs, what could they do to make these more successful/valuable?” asked the bank.
“For those hoping that Tencent might take all of Ubisoft private, paying a premium, this story does not back that up,” stated Barclays.
However, they said it does indicate that discussions between the two parties are active, contradicting previous suggestions that talks had stalled.
Barclays concludes: “Overall if this plan of separating out some IP into a new venture is pursued, we will need to see far more detail to understand the implications for the Ubisoft equity story. But at east this shows some progress in the short term regarding a plan to support the value of the group.”