Tencent Holdings ( OTCPK:TCEHY ) is more than doubling its holdings in French videogame maker Ubisoft ( OTCPK:UBSFY ), the company says, as the founding Guillemot brothers sell a minority stake in its family business.
Ubisoft stock is jumping: It's risen 14% in U.S. trading, after closing up 0.5% in Paris trading Tuesday.
Tencent will buy a 49.9% economic stake in Guillemot Brothers Ltd. - an investment coming to €300M, €200M of which is share acquisition and €100M a capital increase.
Tencent's voting rights in the limited company are just 5%, and the Guillemot brothers retain firm exclusive control there. Tencent is also providing Guillemot Brother Ltd. with a long-term unsecured loan to refinance its debt.
The move permits Tencent to boost its direct stake in Ubisoft to 9.99%, from a current 4.5%. Tencent will not be able to sell its share in Ubisoft for five years, and beyond that will give the Guillemots a right of priority. It also won't be able to boost its stake beyond 9.99% for eight years.
And the transaction values Ubisoft at an implied €80 per share. Ubisoft closed at €43.50 per share in Paris Tuesday.
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Ubisoft jumps 14% as Tencent will double its stake