Tencent Holdings Limited has agreed to buy the remainder of Sumo Group Plc that it does not actually own, adding to the Chinese gaming and social media giant’s string of investments in the gaming sector. launch.
The Asian company’s most valuable offer is 513 pence per share for Sumo, a 43% increase over the British company’s previous closing, and the offer values Sumo on a fully discounted basis at £919 million ($1.26 billion). Tencent actually owns about 8.75% of SOMO, giving the shares outstanding a value of around £803m.
In addition, “Tencent” is the largest global games company, and it has stakes in giant companies such as “Riot Games” and “Epic Games Inc”, and it has previously announced plans to pump a larger part of its increased profits this year. In cloud services, games and video content, in order to fend off competition from the likes of Bydance Limited and increased scrutiny from Beijing.
Shares of Sumo jumped 42% to 509 pence at 9:01 am in the London trading session, after earlier jumping 45%, their biggest daily gain ever.
A note from Jefferies Financial Group Inc analysts on Monday said, “Chinese deals may involve higher regulatory risk, but we don’t see potential resistance or counter-offering. We’ve always understood Tencent’s interest in SOMO, because The latter has the potential to develop AAA (Triple A) video games, which require huge development and marketing budgets, perhaps because we’ve seen the appeal of future productions of the group.”
Sumo, for its part, creates games for other publishers like Apple Inc’s Arcade service, according to its website, while other customers and partners include Xbox Game Studios, Electronic Arts Inc, and Activision Blizzard. Inc., and Ubisoft Entertainment SA.
“The company will leverage Tencent’s extensive video game ecosystem, real-world industry expertise and strategic resources that will help Sumo secure and advance its long-term aspirations and success,” Ian Livingston, non-CEO of Sumo said in a statement.
Merger and acquisition activity
Over the past period, Tencent has increased its investment and M&A activities by investing and acquiring more than 62 gaming companies in the first half of 2021.
The Tencent-Sumo deal follows the sale of one of Britain’s oldest game studios, Codemasters, to Electronic Arts for $1.2 billion in December, beating a rival bid from Take-Two Interactive Software Inc. “.
The deal comes as British lawmakers are urging the government to rethink its open-door approach to foreign takeovers, as Chinese investors increasingly support start-ups from British universities and some of Britain’s biggest tech firms with headquarters in China or Japan.
SOMO is a success story for its home city of Sheffield in northern England, another indication that the programming could help replace the steel industry with the steel city famous for its production when Britain produced nearly half of the world’s supply of the metal. However, China currently accounts for half of the world’s production, while Britain produces almost none.
Sumo’s current headquarters are located on the banks of a river between the 250-year-old Sheffield Forgemasters steel foundry and Meadowhall Mall, the area where locals sought refuge when floods devastated the area two years ago.