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July 21, 2021

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Tencent buys British gamer Sumo

Chinese tech giant Tencent is buying British gaming company Sumo Group for US$1.3 billion in its latest globalization initiative and to add to its gaming titles.

The board of the British company has agreed to the purchase which is a premium of approximately 43.3 percent to Sumo鈥檚 closing price of 358 pence per share last Friday.

The cash offer by Tencent鈥檚 wholly-owned subsidiary Sixjoy Hong Kong Limited for the entire issued, and to be issued, share capital follows a strategic investment of around 8 percent by Tencent in Sumo in November 2019.

The two companies 鈥渉ave a strong cultural alignment, in addition to complementary skills and expertise,鈥 according to a statement on Monday.

鈥淭he board of Sumo firmly believes the business will benefit from Tencent鈥檚 broad video gaming ecosystem, proven industry expertise and its strategic resources,鈥 Ian Livingstone, chairman of Sumo, said in a statement.

Gaming market research firm New Zoo expects the global gaming market to enjoy an 8.7 percent compound annual growth to US$218.7 billion by 2024 and 2.8 billion of the world鈥檚 3 billion gamers will be playing using mobile devices.

China will lead the growth in the cloud gaming sector with an estimated US$880 million market value by 2023 as part of a US$5.14 billion global market, thanks to higher smartphone penetration and deployment of 5G networks, the research firm said.

The announcement comes weeks after China鈥檚 State Administration for Market Regulation鈥檚 decision to block Tencent鈥檚 plan to merge China鈥檚 two top game livestreaming sites, Huya and Douyu, citing anti-monopoly concerns.

Tencent is also seeking to accelerate Sumo鈥檚 business transformation to explore its in-house titles and game IPs by providing the necessary financial and operational resources to bolster Sumo鈥檚 own game title development and distribution.

Sumo can benefit from Tencent鈥檚 expertise and knowledge of game development and game operations, such as its know-how in game-as-a-service and in-game operations, and from Tencent鈥檚 publishing expertise and coverage.

It would also strengthen Tencent鈥檚 gaming business following strategic investment in other overseas gaming giants including Riot, Epic, Miniclip, Ubisoft and Funcom.


 

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