- Stocks climb early in trading to record highs
- Tencent offers 513p per Sumo share
- Sumo boss says he enjoys working with Tencent
July 19 (Reuters) – China’s Tencent (0700.HK) will buy UK video game developer Sumo (SUMO.L) for $ 1.27 billion, it said on Monday, adding new titles to its portfolio growing number of video games topped the charts.
The purchase, which will strengthen the Chinese internet giant’s presence globally, brings together Sumo’s running and snooker games with Tencent’s more prominent game line, which includes the mobile version of Call of Duty.
Shareholders of Sheffield-based Sumo will receive 513 pence in cash per share, a 43% premium over the last price and valuing the company at £ 919million, Tencent said, pushing Sumo shares up 42% at an all time high.
The deal comes days after China’s market regulator decided to block Tencent’s plans to merge video game streaming sites, Huya (HUYA.N) and DouYu, on antitrust grounds.
This is the second major deal involving a UK video game company in the past year, after US video game maker Electronic Arts (EA.O) agreed to buy UK-based Codemasters. Read more
Tencent, with stakes in companies that make Fortnite and League of Legends, is the world’s second-largest video game group by revenue after Sony.
“The Chinese deals may involve higher regulatory risk, but we see no resistance or likely counter-offers,” Jefferies analysts said.
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Sumo, which counts Microsoft’s Xbox, Amazon Game Studios, Apple, Google and BBC among its customers and partners, has seen its value skyrocket since listing in 2017 on LSE’s junior market AIM at 100 pence.
“Sumo’s Board of Directors strongly believes that the company will benefit from Tencent’s vast video game ecosystem, proven industry expertise and strategic resources,” said Non-Executive Chairman Ian Livingstone.
Tencent owns 8.75% and is the second largest shareholder in Sumo, which owns 14 studios in five countries and released video games including Hotshot Racing, Sackboy: A Big Adventure and WST Snooker last year.
Sumo boss Carl Cavers has said he and co-founders Paul Porter and Darren Mills will reprise their roles.
“The opportunity to work with Tencent is one we just couldn’t miss,” said Cavers, who founded the company 18 years ago.
($ 1 = 0.7261 pounds)
Reporting by Muvija M in Bengaluru; Editing by Arun Koyyur and Edmund Blair
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