Tencent buys UK games company Sumo for £919m

Tencent has struck a £919m deal to purchase the UK video games developer Sumo Group, because the Chinese language tech firm continues its years-long worldwide gaming acquisition spree.

Sumo, which was based in Yorkshire in 2003, has developed video games for Sony, Microsoft and Sega together with instalments of the Forza, Hitman, Sonic and LittleBigPlanet franchises.

Consolidation has been accelerating within the video video games trade, as console-focused publishers snap up cellular app builders and bigger platform homeowners attempt to safe unique content material.

Tencent’s supply of 513p per share in money, by way of its subsidiary Sixjoy Hong Kong, comes at a 43 per cent premium to Friday’s closing share worth. Shares in Sumo jumped to 508p in early buying and selling on Monday morning in London.

“The board of Sumo firmly believes the enterprise will profit from Tencent’s broad videogaming ecosystem, confirmed trade experience and its strategic sources,” stated Ian Livingstone, the UK gaming veteran who serves as Sumo’s chair.

If permitted by shareholders, the deal can be one other instance of abroad consumers taking up a part of the UK’s flourishing video games improvement trade, after California-based Digital Arts closed its £945m acquisition of Codemasters in February.

Tencent, the Shenzhen-based proprietor of WeChat, took a minority stake in Sumo in November 2019, now value 8.75 per cent of the corporate. Its portfolio of video games firms already contains Supercell, the Finnish makers of Conflict of Clans, and US-based League of Legends developer Riot Video games, in addition to minority stakes in Activision Blizzard, Epic Video games, Voodoo, Frontier Developments and Ubisoft.

The transfer for Sumo comes at a time when regulators in each the US and China — the world’s two largest video games markets — have been bringing Tencent’s investments and acquisitions below closer scrutiny, as a part of broader crackdowns on Huge Tech and Chinese language firms’ abroad dealmaking.

Sumo went public on London’s Intention at 100p a share in 2017, simply over a yr after it was acquired by non-public fairness agency Perwyn. The corporate has 1,200 workers throughout 14 studios in 5 international locations, together with in India and Poland in addition to across the UK.

Perwyn, which owns about 17 per cent of Sumo, stated it might suggest the Tencent supply.

Forward of Monday’s announcement, Sumo’s share worth had greater than doubled for the reason that pandemic started, as lockdowns gave a broad increase to the gaming trade.

Nevertheless, the shares have risen by solely 7 per cent to date this yr, with gaming development showing to gradual as lockdowns are lifted. Final week, figures from NPD Group confirmed that total shopper online game spending within the US grew 15 per cent yr on yr within the first half of 2021, in contrast with 27 per cent development for 2020 over the earlier yr, with development of simply 1 per cent in software program and content material gross sales in June 2021.

Goldman Sachs and Zeus Capital suggested Sumo on the deal.