Move expands Chinese tech company\u2019s presence in the global video games market<\/p>\n
First published on Mon 19 Jul 2021 04.13 EDT<\/p>\n
China\u2019s Tencent has agreed to buy the British video games developer Sumo Group at a valuation of more than \u00a3900m, further expanding the tech company\u2019s presence in the global video games market.<\/p>\n
Sumo\u2019s board has agreed to Tencent\u2019s offer of 513p a share, valuing the company at \u00a3919m, it announced on Monday.<\/p>\n<\/p>\n
The price represented a premium of about 43% to Sumo\u2019s closing share price of 358p on Friday, before the deal was announced, and was also much higher than its all-time high of 407p. Shares surged 42% in early trading on Monday, to 509p.<\/p>\n
Tencent said it had received pledges to back the takeover from the holders of 27% of Sumo\u2019s shares, plus its own holding of nearly 9%.<\/p>\n
Tencent is one of the biggest companies in the world thanks to its control of the Weixin\/WeChat social media app, which is used across China for chat and mobile payments, as well as gaming.<\/p>\n
It also controls large video game and esports interests, in a market that is expected to grow rapidly after a hiatus at the start of the pandemic. That includes ownership of Riot Games, the developer of the wildly popular League of Legends franchise, plus stakes in other games developers including Epic Games, the maker of the Fortnite series and Finland\u2019s Supercell, the maker of the mobile game Clash of Clans.<\/p>\n
Sumo was set up in 2003 as a developer for hire, working on parts of other companies\u2019 games. Eventually it took control of developing entire games, with past titles including a Sonic the Hedgehog game for Sega, LittleBigPlanet for Sony and Hitman in collaboration with IO Interactive.<\/p>\n
After two private equity-backed buyouts in 2014 and 2016, Sumo listed on the London Stock Exchange\u2019s Alternative Investment Market in 2017. It employs more than 1,200 people across 14 locations in the UK, Poland, Canada, India and the US. Tencent first bought shares in Sumo in November 2019.<\/p>\n
Carl Cavers, Sumo\u2019s chief executive and co-founder, said: \u201cThe opportunity to work with Tencent is one we just couldn\u2019t miss. It would bring another dimension to Sumo, presenting opportunities for us to truly stamp our mark on this amazing industry, in ways which have previously been out of reach.\u201d<\/p>\n
Cavers and two other co-founders, Paul Porter and Darren Mills, will continue to work in the business if the deal goes through.<\/p>\n