Saturday, October 16, 2021
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China’s Tencent lines up $1.27 billion to buy British videogame developer Sumo

The move assumes significance as this is likely to help China further expand its portfolio in the segment. The purchase is also likely to boost Chinese presence globally

In a major takeover bid to make inroads in the global videogames space, China’s Tencent has lined up $1.27 billion to buy British videogame developer Sumo. The move assumes significance as this is likely to help China further expand its portfolio in the video games segment.

The purchase is also likely to boost Chinese presence globally. Together Sumo’s racing and snooker games with Tencent’s more high-profile range of games that includes Call of Duty’s mobile version are among the top in-demand games at present.

Meanwhile;e, 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 U.S. 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 videogame group by revenue after Sony.

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

 
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 videogaming 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.

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