The big picture: Recent reports indicate Tencent wants to become Ubisoft's biggest shareholder, working out an aggressive deal to buy stocks from public shareholders and the Guillemot family. Tencent is likely seeking more international gaming revenue as both companies have run into turbulence recently.

Sources have told Reuters that Tencent senior executives met with Ubisoft's founding Guillemot family in May to discuss making an additional stake purchase in the company. Tencent bought five percent of Ubisoft in 2018. It isn't clear how much more Tencent wants, but it's aiming to become Ubisoft's single largest shareholder.

The deal's details aren't final yet, but Tencent is making an aggressive offer at a premium. Ubisoft's stock price over the last three months was 44 euros a share, but Tencent is offering 100. Ubisoft's historical ceiling was 108 in 2018. The Guillemot family owns 15 percent of Ubisoft while public shareholders hold around 80 percent. Tencent wants to buy shares from both groups.

Owning most of Ubisoft could be a way for Tencent to increase its stake in gaming through international revenue streams. The company has recently suffered from regulatory squeezes in its domestic Chinese market.

Last August, China tightened limits on gaming for those under 18, restricting them to just a few hours of playtime a week. There were hopes that China would ease those restrictions after a year, but Tencent revealed it sees no indication of that happening.

The company also had to shut down its NFT ambitions in China due to the government's harsh regulations in that sector. China froze new game monetization licenses last summer. It started approving games again in April, but none from Tencent.

Together with Logitech, the company is developing a cloud-based gaming handheld. Set to launch later this year, it would let users play games through streaming services like Xbox Cloud Gaming and Nvidia GeForce Now.

Ubisoft has had its own troubles lately. Last month it had to cancel four games, including a free-to-play Ghost Recon, a virtual reality Splinter Cell game, and two unannounced titles. During the same earnings call, the company announced the delay of its upcoming Avatar game and another unannounced project into 2023-24.

In April, rumors suggested that multiple investment firms aimed to take over Ubisoft, including Blackstone, KKR & Co, and others. However, it isn't clear if Ubisoft is interested in a buyout.

The publisher is expected to reveal its next Assassin's Creed game in September. Ubisoft's two major upcoming releases this fall are Mario + Rabbids Sparks of Hope, and Skull & Bones. The latter went through a tortuous five-year development cycle.

Tencent currently owns all of Riot Games, 40 percent of Epic Games, nine percent of Frontier Developments, and a majority stake of Clash of Clans maker Supercell. It wants to buy Sumo for $1.3 billion.