Tencent Needs Approval for Buying Sumo From a US Committee
It seems all is not going swimmingly for Tencent for their major deal. Despite buying the game developer of Sackboy: A Little Big Adventure, Sumo now reports that the sale must now be approved by the Committee on Foreign Investment in the United States (also known as CFIUS for short) before it can be finalized. Tencent has agreed to work together with Sumo in order to gain the CFIUS approval.
The reason that the $1.27 billion deal, which would add many games to Tencent’s already extensive gaming library, has become a red flag for CFIUS in the first place is because of Sumo’s ownership of studios within the US borders, including Pipeworks Studios. The Committee, which has been around since the Donald Trump era, investigates business deals between Chinese and American businesses on the basis of potential threats to national security, namely American security. There have been business acquisitions that have been abandoned due to difficulty to gain the CFIUS approval. But it’s unlikely that Tencent will be so quick to let this lucrative deal go by the wayside. Not only is Tencent already in the big deal territory, being around a 1 trillion-dollar market value, but Tencent is already in the process of negotiating with the American Committee on other business dealings it has. Namely, Tencent is ensuring that it keeps its stakes in Epic Games and Riot Games, as the flag was raised, again in the name of American national security.
Tencent has been known for investing in many projects over the years, not limited to Call of Duty: Mobile, Fortnite, and League of Legends, while also venturing into e-commerce, and social media. Not to mention, it is the second-largest video gaming group, ranking after Sony in July. It’s little wonder that Sumo in particular is hoping that the acquisition will be greenlit by the end of the year. And it may be possible with Tencent’s backing.
How do you feel about this bump in the acquisition road for Sumo and Tencent? Let us know in the comments below, or on Twitter or Facebook!