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Shares in Ubisoft Entertainment tumbled on Wednesday after it announced a deal that sees China's Tencent Holdings raise its stake in the company, a move which analysts say dampens the prospect of a full sale of the French game maker.
The deal with Tencent Holdings values the maker of "Assassin's Creed" and "Tom Clancy's" video game franchises, at $10 billion, or around 80 euros per share, well above Tuesday's stock price closing level of 43.5 euros.
It makes Tencent Ubisoft's single biggest shareholder with an overall stake of 11%, which can be further increased to as much as 17%.
The deal, which comes hot on the heels of the acquisition by NetEase of unlisted French video games maker Quantic Dream, highlights a wave of consolidation in the sector, with tech giants snapping up independent players.
It also caps a difficult four-year period at Ubisoft, marked by a succession of delays of new video games and allegations of sexual harassment that led to a revamp of its top management.
Ubisoft has long been seen as a takeover target, although the founding Guillemot family managed to beat off a raid by media group Vivendi in 2015.
Traders and analysts said the Tencent deal was positive for the French company but removed the speculative appeal of Ubisoft shares.
"The prospects of a takeover and a fight for Ubisoft are gone as Tencent is now really (there)," said MidCap's analyst Charles-Louis Planade.
A London trader said Ubisoft shares were down on "disappointment that it may not be a takeover target as Tencent has increased (its) stake."
The transaction makes Tencent part of a shareholder pact with the Guillemot family. The deal involves Tencent's acquisition of 49.9% of Guillemot Brothers Limited - the holding company that owns the bulk of family's 15% stake in Ubisoft - with just 5% voting rights.
Tencent's investment in Guillemot Brothers amounts to 300 million euros, Ubisoft said in a statement on Tuesday evening.
Tencent will not be able to sell its shares for five years, beyond which the Guillemot family will have a pre-emptive right to buy the shares. Ubisoft also said Tencent pledged not to increase its direct stake in the French games-maker beyond 9.99% for a period of eight years.