Tencent Agrees to Buy Video Game Maker Sumo Group for $1.27B


Shares of Sumo skyrocketed over 40% on the London Stock Exchange on Monday following the news of the acquisition.

Tencent Holdings Ltd (HKG: 0700) has announced today that it agreed to purchase Sumo Group, a British video game company in a deal worth up to $1.26 billion. According to reports, Tencent, a Chinese tech giant is offering $7.08 a share for Sumo, a 43% premium to the company’s Friday closing price of $4.94.

Tencent’s recent acquisition of the British video game company now adds to the already long list of a foreign company taking over a U.K. video game firm. Codemasters, a British racing game maker was recently purchased by EA for $1.2 billion, whiles Tonic Games Group, the makers of Fall Guys, was also recently acquired by Epic Games.

Tencent, the world’s largest video game publisher already owns an 8.75% stake in Sumo and has over the years acquired stakes in several gaming companies including owning Riot Games, developers of League of Legends, Supercell a Finnish mobile games maker, and a 40% stake in Epic Games, the company behind global hit game, Fortnite.

Sumo mainly develops games for other publishers and has quite a glowing portfolio including Sackboy: A Big Adventure, a title published by Sony, as well as other racing games based on Sega’s Sonic the Hedgehog franchise. The company has 14 studios in five countries and employs over 1,200 people.

Chairman of Sumo in a statement after the announcement said that “the Board of Sumo firmly believes the business will benefit from Tencent’s broad videogaming eco-system, proven industry expertise, and its strategic resources.” The latest acquisition will also have an impact on the US market as Sumo Digital owns Pipeworks, an Oregon-based company, and makers of Rival Peak. Pipeworks just opened a studio called in Vancouver called Timbre Games.

Tencent also has several smaller stakes in many gaming companies including Bohemia Interactive, a Czech company, French indie game developer Dontnod Entertainment, and Paradox Interactive, a Swedish strategy game publisher.

Daniel Ahmad, an analyst at Niko Partners, speaking on Tencent’s recent acquisitions over the year stated that the company has increased the pace of its investments and acquisitions over the past year, and is looking to strengthen its position and push into new growth areas for the company.

“Tencent is acquiring Sumo Digital for its breadth of experiencing developing and operating AAA games and live service games, the majority of which are developed for clients such as Sony, Microsoft, Sega, and others,” he stated.

Shares of Sumo skyrocketed over 40% on the London Stock Exchange on Monday following the news of the acquisition. The company’s share has risen several times since Sumo went public on the London Stock Exchange AIM market in 2017.

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Kofi Ansah

Crypto fanatic, writer and researcher. Thinks that Blockchain is second to a digital camera on the list of greatest inventions.

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