Tencent, the Chinese entertainment and tech group, was given approval last week to move ahead with its planned $1.27 billion (£900 million) acquisition of games group Sumo Group. The purchase, first announced in July last year, is one of the Chinese giant’s largest moves to date in the U.K.
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% of the company since 2019. It offered £5.13 per Sumo share for the stock which is listed on the AIM section of the London Stock Exchange.
Sumo said in a statement that the High Court in England and Wales had approved the deal and that its shares would cease to be traded. It has also been reported that Ian Livingstone, Michael Sherwin and Andrea Dunstan will no longer be non-executive directors.
The deal had also been examined in the U.S. by the Committee on Foreign Investment in the United States, due Tencent’s Chinese nationality and to Sumo subsidiary Pipeworks Studios’ presence in Oregon. It received U.S. approval in December.
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 COVID-19 pandemic, despite a regulatory crimp at home. PC Gamer reported that Tencent acquired 31 games studios in 2020.
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 in July.
Following the High Court approval, Tencent sources again told Variety that the group expects to continue a hands-off stance and to leave local management in place.
Tencent has a significant but low-key presence in the U.K., though it is considerably narrower than the group’s wide-reaching span of activities in China, which stretch from games, video and social media to business solutions and payments. In the U.K., its two main sectors are games industry investment and research and development, often conducted in partnership with local companies, institutions and government.
Its operations include Congenica, a U.K startup that pioneered the genomic study of rare diseases; TrueLayer, a U.K. startup developing open banking systems; Oxford Nanopore, which uses genomes for COVID sequencing; and the British Fashion Council, supplying technology to fashion designers. In December, it was announced that Tencent would join a funding round and take a minority interest in U.K. online banking firm Monzo.
A Tencent-supplied fact sheet lists current investments in at least 16 U.K. companies, including Vaccitech, Miniclip, Ultraleap and Payload Studios.
A corporate website reveals that Tencent currently has 15 vacancies for U.K. staff positions. These include two in mergers and acquisitions, a head of corporate communications and a senior human resources manager.
Private sector companies in China are often put on the front line of enforcing government policy in matters such as censorship and corruption.
This week, Tencent said that it had fired nearly 70 employees during 2021 for behavior that included accepting bribes and offering fake online internships. It referred at least ten cases to police for suspected criminal investigation and said that it had blacklisted 13 outside companies from future cooperation.
The group’s market-leading Tencent Video was recently revealed to be home to a recut version of David Fincher’s 1999 film “Fight Club.”