Tencent To Buy British Video Game Company Sumo In $1.3 Billion Deal

Chinese multinational technology conglomerate holding company Tencent Holdings Ltd. has revealed plans to buy British video game company Sumo Group. According to what the companies said on Monday, Tencent Holdings Ltd. is acquiring Sumo Group in a deal that values the British company at £919 million ($1.27 billion).

Tencent stated that shareholders of Sumo will receive 513 pence in cash per share and that the offer is at a 43 percent premium to Sumo’s last closing price of 358 pence. The share has more than doubled since it got listed on London Stock Exchange’s junior market – AIM in 2017 at 100 pence.

This deal comes almost a week after China’s antitrust regulator approved Tencent‘s plan to privatize Sogou Inc in a $3.5 billion deal that entails Tencent buying 60% of Sogou. In recent times Tencent, like other big tech companies in China, has been faced with regulatory decisions from Chinese authorities. China’s antitrust regulator is set to take over control of Tencent Holdings music streaming arm according to sources who know about the matter, as the imminent order will force Tencent Holdings Ltd to give up exclusive rights to its music labels. Also, as a penalty for not properly flagging the acquisition of apps Kuwo and Kuguo, the company will be fined by the State Administration of Market Regulation (SAMR), a sum of 500,000 yuan ($77,150). Last week Tencent’s plans to merge the country’s biggest video game streaming platforms Huya and DouYu were also stopped by the country’s antitrust regulator. According to the State Administration of Market Regulation (SAMR), Huya and DouYu’s combined market share in the video game live streaming sector would surpass 70%, and merging them into one firm would only consolidate Tencent’s dominance in this market as it already has over 40% market share in the online games operations segment.

Video game company Sumo is based in Sheffield, England, and was founded in 2003 by previous members of Infogrames Studios. The company has 14 studios in five countries and currently employs over 1,200 people. Tencent already owns an 8.75% stake and is the company’s second-biggest stakeholder.

According to Sumo’s non-executive chairman Ian Livingstone, “the Board of Sumo firmly believes the business will benefit from Tencent’s broad videogaming eco-system, proven industry expertise, and its strategic resources”.

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