Tencent Holdings Ltd is poised to double its stake in Ubisoft Entertainment SA, giving breathing room to the founding Guillemot brothers known for its Assassin’s Creed franchise without giving up control of the French video game publisher to get the company back on track.

According to a statement released on Tuesday, Tencent will acquire a 49.9% stake in the holding company of Guillemot Brothers Ltd. The Chinese tech giant will pay €200 million ($198 million) for an indirect stake in Ubisoft at an implied value of €80 per share and invest a further €100 million in the holding company. The deal also authorises Tencent to increase its direct stake to 9.99% from the current 4.5%. Ubisoft’s governance will remain unchanged, and Tencent will not have any operational veto power.

Ubisoft’s US-traded shares rose 17% on Tuesday, the biggest gain since Bloomberg reported in April that it had attracted initial interest from buyout funds, including Blackstone Corp and KKR & Co. Ubisoft has been seen as a takeover target as concerns about a delayed launch and allegations of widespread sexual misconduct have sent the stock down about 45% since the start of last year.

More Tencent involvement will provide some certainty on the shareholder register of the brothers who founded Ubisoft in 1986, and the recovery plan is working. CEO Yves Guillemot announced cost cuts and lowered full-year sales targets in July. Ubisoft announced it delayed its upcoming Avatar game from the 2022 holiday season to the next fiscal year.

Guillemot said in an interview that the Tencent deal “has helped us stabilise our equity in the company.”
Tencent originally bought a 5% stake in Ubisoft in 2018 to help it thwart a hostile takeover from Vivendi. The Shenzhen-based company has invested in global game publishers, including Epic Games and Activision Blizzard. Its influence over China’s internet economy has made it a target for Beijing to curb the influence of tech industry leaders. Tencent has yet to gain regulatory approval for a new video game, although government officials have been doing so after the industry was put on hold to curb addiction.

Ubisoft said the latest deal includes a partnership with Tencent to bring some of its biggest franchises to the mobile platform, but it’s also helpful when Ubisoft is struggling.

Tencent will not be able to sell its stake in Ubisoft for five years, after which the Guillemot family will have the first right of any sale. In addition, Tencent will not be able to increase its stake in Ubisoft to more than 9.99% of Ubisoft’s capital and voting rights within eight years.

After acquiring the Guillemot brothers, Tencent will own 11.3% of Ubisoft. By increasing its authorised direct holdings, it could hold as much as 16.8% of the business.

The agreement could allow Tencent, its family and the Guillermo brothers to increase Ubisoft’s combined stake to 29.9% of Ubisoft’s voting rights, the statement said. Tencent also provides long-term unsecured loans to holding companies to repay debts. Those deals still leave room for another investor to step in.