• Ubisoft has announced it will be creating a new subsidiary which holds control of the Tom Clancy’s Rainbow Six, Assassin’s Creed and Far Cry franchises.
• Tencent has paid €1.16 billion for a 25 percent stake in the subsidiary putting its valuation at roughly €4 billion.
• This new subsidiary will also include the teams that work on the titles it will control when the transaction concludes at the end of the year.

For months we’ve heard that Assassin’s Creed Shadows would be make or break for Ubisoft, but unbeknownst to pundits, Ubisoft was working behind the scenes to ensure its continued viability.

On Thursday the French gaming behemoth announced that it had received a €1.16bn cash injection from Chinese colossus Tencent for a 25 percent stake in a new Ubisoft subsidiary that is comprised of the developer/publisher’s biggest titles. Ubisoft will maintain a controlling stake of the subsidiary and will do so for at least two years, while Tencent can’t take up new shares for five years. That having been said, if Ubisoft loses its majority stake, Tencent can hoover up more shares.

Those titles include Tom Clancy’s Rainbow Six, Assassin’s Creed and Far Cry. While Ubisoft will retain control of the subsidiary, Tencent will hold a 25 percent stake in it as well. This puts this new subsidiary’s value at over €4 billion.

“With the creation of a dedicated subsidiary that will spearhead development for three of our largest franchises and the onboarding of Tencent as a minority investor, we are crystalizing the value of our assets, strengthening our balance sheet, and creating the best conditions for these franchises’ long-term growth and success. With its dedicated and autonomous leadership team, it will focus on transforming these three brands into unique ecosystems,” co-founder and chief executive officer of Ubisoft, Yves Guillemot said in a statement.

This new subsidiary will also include the teams that work on the titles outlined above which are based in Montréal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia. Ubisoft’s back catalogue and new titles under development also form part of the transaction.

“We are excited to extend our longstanding partnership with Ubisoft through this investment, which reflects our continued confidence in Ubisoft’s creative vision and exceptional talent to drive sustained success in the industry. We see the immense potential for these franchises to evolve into long-term evergreen game platforms and create engaging new experiences for gamers,” Martin Lau, president of Tencent, said in a statement.

The deal is set to be concluded by the end of 2025.

As of the time of writing, there is no name for this subsidiary, and it’s simply referred to as “New subsidiary” in Ubisoft’s announcement to investors.

This is a massive deal for Ubisoft. Not accounting for this new subsidiary, Ubisoft’s market capitalisation sits at €1.91 billion. Once the subsidiary is properly established, Ubisoft will likely see that market cap climb to heights it hasn’t seen since the peak of the pandemic.

It’s important to note that Ubisoft will still retain complete control of its other franchises including Tom Clancy’s Ghost Recon, Just Dance, Prince of Persia, Anno and Watch Dogs and the many others it has under its belt.

It will be interesting to see whether Ubisoft invests in some of these franchises now that development and control of Assassin’s Creed, Tom Clancy’s Rainbow Six and Far Cry are under the purview of this new subsidiary.

Maybe we’ll even see a return of the Driver series or even a new Watch Dogs game. We can hope right?