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Tencent Snaps Up British Game Developer Sumo in $1.27bn Deal
A staff member is seen at a Tencent booth at the China Internet Conference in Beijing on July 13, 2021. Photo: Tingshu Wang/ Reuters.
  • Shares of Sumo soar 42% on news of Tencent takeover of British game developer
  • Deal comes shortly after China’s regulator blocked merger with Huya & DouYu

 

China’s Tencent will buy British video-game developer Sumo in a $1.27-billion deal, it said on Monday, adding new titles to its growing portfolio of popular video games.

The purchase, which will boost the Chinese internet giant’s presence globally, brings together Sumo’s racing and snooker games with Tencent’s more high-profile range of games that includes Call of Duty’s mobile version.

Shareholders in Sheffield-based Sumo will get 513 pence in cash per share, a 43% premium to the last price and valuing the company at 919 million pounds, Tencent said, sending Sumo’s shares surging 42% to a record high.

The deal comes days after China’s market regulator decided to block Tencent’s plans to merge video-game streaming sites, Huya and DouYu, on antitrust grounds.

It is the second major deal involving a British video-game company over the past year, following US video-game maker Electronic Arts’ deal to buy Britain-based Codemasters.

Tencent, with stakes in companies that make Fortnite and League of Legends, is the world’s second-largest video-game group by revenue after Sony.

“Chinese deals may imply a higher regulatory risk, but we see no likely resistance or counterbid,” Jefferies analysts said.

Expertise and resources

Sumo, which counts Microsoft’s Xbox, Amazon Game Studios, Apple, Google and BBC as its clients and partners, has seen its value soar since a 2017 listing on LSE’s junior market AIM at 100 pence.

“The board of Sumo firmly believes the business will benefit from Tencent’s broad video-gaming eco-system, proven industry expertise and its strategic resources,” non-executive chairman Ian Livingstone said.

Tencent owns 8.75% and is the second-biggest shareholder in Sumo, which has 14 studios in five countries and released the video games including Hotshot Racing, Sackboy: A Big Adventure and WST Snooker last year.

Sumo’s boss Carl Cavers said he and co-founders Paul Porter and Darren Mills would reprise their roles.

“The opportunity to work with Tencent is one we just couldn’t miss,” said Cavers, who founded the company 18 years ago.

Reporting by Reuters

 

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