Tencent to expand UK presence with $1.25 billion sumo gaming deal
Tencent, the Chinese entertainment and technology group, received clearance last week to go ahead with its planned $1.27bn (£900m) acquisition of gaming group Sumo Group . The purchase, first announced in July last year, is one of the biggest moves by the Chinese giant to date in the UK.
Sumo is best known for “Sackboy: A Big Adventure,” a Sony-published title, as well as racing games based on Sega’s “Sonic the Hedgehog” franchise. Tencent has owned 8.75% of the company since 2019. It has offered £5.13 per Sumo share for the stock listed on the AIM section of the London Stock Exchange.
Sumo said in a statement that the High Court of England and Wales had approved the deal and its shares would cease trading. It has also been reported that Ian Livingstone, Michael Sherwin and Andrea Dunstan will no longer be non-executive directors.
The transaction had also been reviewed in the United States by the Committee on Foreign Investment in the United States, due to the Chinese nationality of Tencent and the presence of Pipeworks Studios, a subsidiary of Sumo, in Oregon. It received US approval in December.
Tencent is already the biggest games company in the world, with a portfolio of companies including stakes in Ubisoft, Activision Blizzard, Riot and Epic. Analysts say Tencent has ramped up its game acquisition spree since the start of the COVID-19 pandemic, despite regulatory crimping at home. PC Gamer reported that Tencent acquired 31 game studios in 2020.
Sumo was founded in Sheffield in 2003 and was acquired by US games company Foundation 9 Entertainment in 2008. It was acquired by management in 2014 and listed on the UK stock exchange in 2017.
Sumo’s three co-founders are expected to stay with the company. “Tencent has a strong track record of supporting management teams and their existing strategies. Along with accelerating work on its own intellectual property, Tencent has demonstrated its commitment to supporting the work of our customers and stated its intention to ensure that we have the investment necessary to continue to focus on the work. with our main strategic partners on turnkey solutions and co-development. projects,” Sumo co-founder Carl Cavers said in a statement in July.
Following the High Court’s approval, Tencent sources again said Variety that the group expects to maintain a hands-off attitude and leave local management in place.
Tencent has a large but low-key presence in the UK, although it is considerably narrower than the group’s vast range of business in China, which extends from games, video and social media to business solutions and to payments. In the UK, its two main sectors are investment in the games industry and research and development, often carried out in partnership with companies, institutions and local governments.
Its businesses include Congenica, a UK startup that pioneered the genomic study of rare diseases; TrueLayer, a British startup developing open banking systems; Oxford Nanopore, which uses genomes for COVID sequencing; and the British Fashion Council, which provides technology to fashion designers. In December, it was announced that Tencent would join a funding round and take a minority stake in British online bank Monzo.
A factsheet provided by Tencent lists current investments in at least 16 UK companies, including Vaccitech, Miniclip, Ultraleap and Payload Studios.
A company website reveals that Tencent currently has 15 vacancies for positions in the UK. These include two mergers and acquisitions, a corporate communications manager and a senior human resources manager.
Private sector companies in China are often placed on the front lines of enforcing government policy in areas such as censorship and corruption.
This week, Tencent said it fired nearly 70 employees in 2021 for behavior that included accepting bribes and offering bogus online internships. It referred at least ten cases to police for suspected criminal investigation and said it had blacklisted 13 outside companies for future cooperation.
It was recently revealed that market leader Tencent Video is hosting a recut version of David Fincher’s 1999 film “Fight Club”.