US national security panel investigating Tencent’s £919m takeover of Sumo Group

A US national security panel is investigating Tencent’s £919m takeover of Sumo Group.

Sumo, which is based in Sheffield but has studios in the US, told Reuters that Chinese megacorp Tencent had agreed to offer undertakings to gain approval from the Committee on Foreign Investment in the United States (CFIUS), which assesses deals to ensure they do not hurt national security.

This is the same secretive taskforce once described by the Washington Post as “Trump’s Watchdog on China Dealmaking”. It’s also looking into the US sale of TikTok.

Tencent’s intent to purchase Sumo, developer of Sackboy: A Big Adventure and Crackdown 3, was announced in July. At the time, Sumo bosses were keen for the deal to go through.

Tencent previously owned an 8.75 percent stake in Sumo, whose development credits also include additional work on Forza Horizon 2, LittleBigPlanet 3, Disney Infinity and Team Sonic Racing.

Sumo has offices across the UK in Sheffield, Nottingham, Newcastle, Leamington Spa and Warrington, and is also the parent company of The Chinese Room, developer of Everybody’s Gone to the Rapture.

On top of those, Sumo also owns the Oregon-based Pipeworks, which works on console versions of Terraria, plus Atomhawk, Lab42, PixelAnt, Red Kite Games and Sumo Pune.

Sumo and Tencent are engaging with the CFIUS to get clearance for the acquisition before the end of the year, Sumo said.

Tencent is the world’s largest video game company in terms of revenue, with significant stakes in a number of western video game publishers, such as League of Legends maker Riot, Clash of Clans studio Supercell, and Fortnite developer Epic Games.

Tencent has been the subject of controversy over the years, with its influence questioned. In October 2019, Blizzard came under fire for banning and revoking the prize money of Hong Kong Hearthstone tournament winner Ng Wai Chung – aka Blitzchung – who used his post-match victory interview to issue a statement of support for Hong Kong protestors. In the face of a public backlash, Blizzard eventually partially rescinded the punishment. Tencent has a five per cent stake in Activision Blizzard.