Tencent Plans to Buy Sumo Group

Tencent said Monday it has agreed to acquire British video game developer Sumo Group for $ 1.26 billion.The Chinese gaming giant is offering 513 pence a share for Sumo, a 44% premium to the company’s Friday closing price. London-listed shares of Sumo skyrocketed more than 40% on news of the deal Monday.Tencent owns an 8.75% stake in Sumo, which mainly develops games for other publishers. Sumo’s portfolio includes Sackboy: A Big Adventure, a title published by Sony, and several racing games based on Sega’s Sonic the Hedgehog franchise.

The acquisition of Sumo marks the latest takeover of a U.K. video game firm by a foreign company. EA bought British racing game maker Codemasters for $1.2 billion, while Epic Games acquired Tonic Games Group, the studio behind Fall Guys, which became a mega-hit during the early part of the Covid-19 pandemic.

Tencent, the world’s largest video game publisher, has acquired stakes in several gaming companies. The company is the owner of League of Legends developer Riot Games and Finnish mobile games maker Supercell. It also holds a 40% stake in Epic Games, the company behind Fortnite.

The company has bought smaller stakes in several gaming companies as well, including French indie game developer Dontnod Entertainment, Swedish strategy game publisher Paradox Interactive and Czech firm Bohemia Interactive. Daniel Ahmad, an analyst at Niko Partners, said that Tencent has increased the pace of its investments and acquisitions over the past year, as it looks to strengthen its position and push into new growth areas for the company.