Chinese Internet company Tencent is taking a nearly 50 percent stake in Ubisoft holding company Guillemot Brothers, the group announced Tuesday. According to Bloomberg-reports, the tech giant is paying 200 million euros to acquire an indirect stake in Ubisoft at a share value of 80 euros each. It is also investing another 100 million euros in the holding company.

After the purchase, Tencent will hold a stake of just under eleven percent in Ubisoft. Following approval, the company is even expected to increase its existing share of five percent, which would bring its stake to 16 percent. Nevertheless, control of Ubisoft remains with the Guillemot brothers. There is no provision for a veto right for the Chinese. In addition, they must hold their shares in the company for five years.

Ubisoft shares plunged twelve percent after the announcement. According to analysts, the negative mood among Ubisoft investors makes a full takeover unlikely. However, Ubisoft itself would not be averse to this scenario, as Frederick Duguet says: “If someone wants to make an offer for Ubisoft as a whole, they can still do so, and the offer will be considered by our board,” citing Bloomberg the Chief Financial Officer from an interview.

The French video game developer is considered a takeover candidate because its stock prices have been weakening since the beginning of last year. On the one hand, delayed product launches have led to a loss in market value. On the other hand, Ubisoft had to fire several top managers after incidents of sexual harassment. As a result, the share price plummeted 45 percent. But Ubisoft’s status as one of the few remaining independent game developers has also piqued Tencent’s interest. The fact that competitor Microsoft has decided to buy video game company Activision Blizzard is also likely to have factored into the move.

Tencent is stepping up its international expansion efforts as the slumping economy and tough Corona regulations keep the market on edge at home. Just recently, the company took a stake in Japanese game developer FromSoftware and bought British game studio Sumo Group for $1.26 billion. Tencent’s strategy is to bring popular franchises to the app format. Observers suspect that the company will launch franchises like Rainbow Six Siege in China as part of the Ubisoft acquisition. Beijing is gradually loosening restrictions on such games across the country.

The large Tencent stake grants the Guillemot brothers the breathing room they need to reform Ubisoft’s business model. CEO Yves Guillemot cut costs for the current fiscal year in July. Due to missed company goals, he said he would forgo one-third of his salary, or about 311,000 euros. The company has also postponed the launch of its Assassin’s Creed Mirage game from summer 2022 to 2023.