(Yicai) March 28 -- Shares of Ubisoft Entertainment surged after the French video games maker launched a new unit focused on its largest franchises, including Assassin’s Creed and Far Cry, with a EUR1.2 billion (USD1.3 billion) investment from Chinese internet giant Tencent Holdings.

Ubisoft [EPA: UBI] was trading up 8.7 percent at EUR14.04 (USD15.12) a share in Paris as of 11.59 a.m. local time today, although the stock’s value is still nearly 30 percent down from a year ago.

Tencent will have a 25 percent stake in the new subsidiary, which will also develop Tom Clancy’s Rainbow Six, Paris-based Ubisoft announced yesterday. The deal values the unit at about USD4 billion, four times Ubisoft's projected average sales for the three fiscal years ending March 31.

The new unit will focus on transforming the three iconic game franchises into distinct ecosystems, led by a dedicated and autonomous leadership team, according to Yves Guillemot, co-founder and chief executive of Ubisoft.

“Today Ubisoft is opening a new chapter in its history,” Guillemot said. “As we accelerate the company’s transformation, this is a foundational step in changing Ubisoft’s operating model that will enable us to be both agile and ambitious.”

Shenzhen-based Tencent bought an initial stake in Ubisoft in 2018 and has grown its ownership to about 10 percent, making it the firm’s second-largest shareholder. Last October, Bloomberg News reported that Tencent was considering collaborating with Ubisoft’s founding Guillemot family to take it private and further increase its stake in the company.

Tencent’s extended partnership with Ubisoft underscores its ongoing confidence in the French company’s creative vision and exceptional talent to sustain long-term success, said President Martin Lau. "We see immense potential for these franchises to evolve into long-lasting, evergreen gaming platforms and to create new, engaging experiences for gamers," Lau added.

This deepening equity collaboration between Tencent and Ubisoft is expected to help the Chinese company address its weaknesses in the console gaming market, tech media outlet 36Kr reported. Historically focused on mobile games, Tencent has developed titles such as Honor of Kings and PlayerUnknown’s Battlegrounds Mobile in response to local gamers' preferences.

China’s console gaming market has strong growth potential, particularly after the success of Black Myth: Wu Kong, developed by Chinese studio Game Science, which achieved phenomenal sales last year. Tencent holds a 5 percent stake in Game Science.

Tencent’s shares [HKG: 0700] closed 0.1 percent higher at HKD509.50 (USD65.60) apiece in Hong Kong today. They have climbed by almost 70 percent in the past 12 months.

Editor: Emmi Laine