Tencent will buy Sackboy developer Sumo in a $1.27bn deal

Chinese gaming giant Tencent has announced its intention to fully acquire British studio Sumo in a $1.27 billion deal.

Tencent already owns 8.75% and is the second-biggest shareholder in Sumo, which has 14 studios spread across five countries and is known for games such as Sackboy: A Big Adventure, Crackdown 3 and Sonic & All-Stars Racing Transformed.

If the deal completes, Sumo will continue to work on its existing projects, including work for hire titles for various clients.

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

Tencent, which has already invested in more than 800 firms, is one of the biggest companies in the world by market value ($680 billion).

As well as owning League of Legends maker Riot Games, it has a 40% stake in Epic Games and holds shares in Activision Blizzard, Ubisoft, PUBG Corporation parent company Bluehole, PlatinumGames, and Marvelous Inc.

Daniel Ahmad, senior analyst at Niko Partners, said that Tencent would likely continue its ‘hands off’ approach when it comes to the management of Sumo, if the deal happens.

“Tencent is acquiring Sumo Digital for its breadth of experience developing and operating AAA games and live service games, the majority of which are developed for clients such as Sony, Microsoft, Sega and others,” he said.

“Tencent will continue to support Sumo on these work for hire projects, but the company could also be an invaluable partner for Tencent as it looks to push into the AAA game space itself with its own projects.

“The deal would also help Sumo utilize Tencent’s expertise in regard to games development and publishing within China.”