Tencent to acquire Sumo Group in $1.3bn deal

Tencent is set to acquire Sumo Group, in a deal that values the developer at $1.27 billion.

Shareholders will receive a 513 pence in cash per share, a 43% increase on Sumo’s previous closing price at 358 pence.

Tencent is already the second-biggest shareholder in Sumo, owning 8.75% of the BAFTA-winning Sackboy: A Big Adventure developer. Although Sumo develops its own IP, it is known for its work-for-hire projects, which will continue following the acquisition.

Sumo CEO Carl Cavers said that he and co-founders Paul Porter and Darren Mills will remain in their roles:

“The three founders of Sumo, who work in the business, Paul Porter, Darren Mills and I are passionate about what we do and are fully committed to continuing in our roles,” said Cavers. “The opportunity to work with Tencent is one we just couldn’t 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.”

“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”

“Tencent is proud to have been an investor in Sumo since 2019, and we view the proposed combination as an evolution of our partnership,” added Tencent’s Chief Strategy Officer James Mitchell. “Tencent is a committed investor in the game industry, with a track record of supporting the growth of game studios around the world. We hold Sumo’s team and the games they produce in high regard, and its strategy and spirit of innovation have underpinned the success of the business over many years.

“Tencent intends to bring its expertise and resources to accelerate the growth of Sumo both in the UK and abroad, supporting Sumo in the market for top-notch creative talent, and the UK as a hub for game innovation. We believe the proposed transaction benefits all stakeholders, delivers compelling value for Sumo shareholders, while enhancing the Sumo business for the future.”

Should the deal go ahead, Sumo marks the second $1bn acquisition of a UK developer this year alone, following EA’s $1.2bn acquisition of Codemasters earlier this year.