Sheffield-based video games developer Sumo Group is set to be acquired by Tencent of China in a takeover deal that values the British firm at £919 million.
The acquisition at 513p per share represents a 43% premium on Sumo’s closing share price on Friday.
It is the latest in a string of deals for Shenzen-based Tencent, a minority shareholder in Sumo since 2019 which has snapped up over 60 video game start-ups around the world over the past year.
The acquisition of Sumo Group, the developer of games including Crackdown and Sackboy, is likely to fuel fresh concerns over a rash of overseas takeovers of listed UK companies this year.
It takes the total combined value of bids to buy UK companies to over £70 billion so far this year.
Created 18 years ago from a single studio in Sheffield, Sumo now operates 14 studios in five countries with more than 1,200 people. The company joined the junior AIM market in December 2017 at 100p per share.
Sumo, which is being advised by Goldman Sachs and Zeus Capital, said its board viewed the offer as “fair and reasonable”.
Ian Livingstone, non-executive chairman of Sumo said: "The board of Sumo considers that the acquisition is in the best interests of all stakeholders in the company and intends to unanimously recommend this offer to shareholders. Tencent's offer of 513p per share demonstrates the tremendous achievements of the management team, both financial and operational."
The deal is set to trigger a windfall for Sumo Group’s directors, including its three founders, chief executive Carl Cavers, Paul Porter and Darren Mills. Together, the firm’s directors control an 8% stake in the company, or 12.7 million shares worth £65 million at the proposed offer price.
Tencent already owns League of Legends maker Riot Games and mobile firm Supercell. It has stakes in the Epic Games, Ubisoft, Activision Blizzard and Activision Blizzard.
James Mitchell, chief strategy officer and senior executive vice president of Tencent said it viewed the proposed combination as an “evolution” of its partnership.
He said: “Tencent is a committed investor in the game industry, with a track record of supporting the growth of game studios around the world. We hold Sumo's team and the games they produce in high regard, and its strategy and spirit of innovation have underpinned the success of the business over many years.”