US Security Committee Reviews Tencent’s £919m Sumo Takeover

A US national security committee is reviewing Tencent Holdings’ proposed £919 million takeover of Sumo Group, the British games studio said.

Sumo, which has studios in the US as well as four other countries, said Tencent had offered concessions to gain the approval of the Committee on Foreign Investment in the United States (CFIUS).

The company is seeking clearance for the deal by the end of the year, Sumo said.

CFIUS has increased its scrutiny of deals involving Chinese firms in recent years and is continuing to investigate a sale of the US version of video-sharing app TikTok.

International expansion

Tencent announced the deal to buy Sumo in July, days after China’s market regulator blocked its plans to merge its videogame streaming sites Huya and DouYu on antitrust grounds.

Sumo, based in Sheffield, works with Microsoft’s Xbox game studios, Apple, Google and others.

The company, which operates studios in the UK, the US, Canada, India and Poland, said at the time of deal was announced that Tencent wanted to accelerate Sumo’s growth and would support the UK as a “hub for game innovation”.

Sumo develops titles including Sackboy: A Big Adventure and Team Sonic Racing, a spin-off of Sega’s Sonic the Hedgehog series.

Surge in demand

Tencent owns Riot Games, developer of League of Legends, and has a majority stake in Finland-based mobile games maker Supercell, creator of titles including Clash of Clans and Brawl Stars. It holds a minority stake in Fortnite developer Epic Games.

Timi Studios, a Tencent division, reportedly generated $10bn (£7bn) in revenues last year due to a spike in demand during the pandemic. The figures would reportedly make Timi the world’s biggest videogame maker by revenue.

Timi develops mobile games including Call of Duty Mobile, Honour of Kings, Arena of Valour, Pokemon Unite and Speed Drifters.