Tencent Holdings Ltd (騰訊) has agreed to buy the rest of Sumo Group PLC it does not already own, adding to a string of gaming investments by the Chinese social media and gaming giant.
Asia’s most valuable firm is offering ￡5.13 per share for Sumo, a 43 percent premium to the British company’s previous close. On a fully diluted basis, the offer values Sumo at about ￡919 million (US$1.26 billion). Tencent had previously purchased a 9.96 percent stake in Sumo in 2019.
Tencent is the world’s largest gaming company, with stakes in giants such as Riot Games and Epic Games Inc.
The company has said it plans to plow a larger portion of its incremental profits this year into cloud services, games and video content, to fend off competition from the likes of ByteDance Ltd (字節跳動) and growing scrutiny from Beijing.
Sumo creates games for other publishers, including for Apple Inc’s Arcade service. Other clients and partners include Xbox Game Studios, Electronic Arts Inc, Activision Blizzard Inc and Ubisoft Entertainment SA, according to its Web site.
“The business will benefit from Tencent’s broad video-gaming ecosystem, proven industry expertise and its strategic resources, which will help secure and further the aspirations and long-term success of Sumo,” Sumo nonexecutive chairman Ian Livingstone said in a statement.
The Tencent-Sumo deal follows the sale of one of Britain’s oldest games studios, Codemasters, which Electronic Arts bought for US$1.2 billion in December last year, beating out a rival bid from Take-Two Interactive Software Inc.
Still, it comes amid UK lawmakers urging government to rethink its open-door approach to foreign takeovers. Chinese investors are increasingly backing the businesses emerging from UK universities, and some of Britain’s biggest technology companies are owned by firms headquartered in China or Japan.
Sumo is a success story for its home city of Sheffield, in northern England, and another sign that software could help replace steel. Sheffield once had the moniker Steel City when the UK was making nearly half of the world’s supply of the metal, but now China accounts for half, and Britain almost none.
Sumo’s headquarters are nestled on a riverbank between a 250-year-old steel foundry, Sheffield Forgemasters, and the Meadowhall shopping mall, where locals two years ago sheltered overnight after flooding devastated the region.
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