Chinese social media and entertainment giant Tencent is adding to its already huge portfolio of games studios with an agreed deal to buy U.K.-based game developer Sumo. The deal is valued at £919 million or $1.27 billion.
Sumo is best known for “Sackboy: A Big Adventure,” a title published by Sony, as well as racing games based on Sega’s “Sonic the Hedgehog” franchise.
Tencent has owned 8.75% since 2019. It is now offering £5.13 per London Stock Exchange-listed share.
The move comes despite a regulatory squeeze on China’s tech sector. Companies including Tencent have been punished for mishandling private data, anti-competitive practices and failure to properly notify authorities of their acquisition plans.
“Tencent intends to bring its expertise and resources to accelerate the growth of Sumo both in the U.K. and abroad, supporting Sumo in the market for top-tier creative talent, and the U.K. as a hub for game innovation,” said James Mitchell, Tencent’s chief strategy officer.
Tencent is already the world’s largest gaming firm, with a portfolio of companies including stakes in Ubisoft, Activision Blizzard, Riot and Epic. Analysts say that Tencent has accelerated its games acquisition spree since the beginning of the coronavirus pandemic, despite the regulatory crimp at home. The PCgamer publication reported that Tencent acquired 31 games studios last year.
Sumo was founded in Sheffield in 2003 and was acquired by U.S. game firm Foundation 9 Entertainment in 2008. It was bought back by management in 2014 and got its U.K. stock market listing in 2017.
Sumo’s three co-founders are expected to stay with the business. “Tencent has a strong track record for backing management teams and their existing strategies. Alongside the acceleration of own-IP work, Tencent has demonstrated its commitment to backing our client work and has stated its intention to ensure that we have the necessary investment to continue focusing on work with our key strategic partners on turn-key and co-development projects,” said Sumo co-founder Carl Cavers in a statement.