Earlier this year, tech behemoth Tencent announced plans to acquire Sumo Group for $1.27 billion following a series of investments beginning in 2019. When the intent to fully buy the UK-based Sumo was made public last month, The US government got involved, noting that the transaction would require an investigation from the Committee on Foreign Investment in the United States (CFIUS). The investigation was justified by the fact that Sumo operates partially in the US through the Oregon-based Pipeworks Studios.
The CFIUS’ investigation appears to have turned up no ill goings-on, as it was announced this week that Tencent’s purchase of Sumo Group would proceed as originally planned.
The CFIUS is charged with assessing any potential national security threats posed by foreign investment into US-based companies. According to attorney Richard Hoeg of Hoeg Law in Michigan, the past few years has seen a particular emphasis on investigations into the software sector, or, more specifically, sectors that might be affected by a cyber attack.
“Mostly, transaction parties voluntarily tell CFIUS what’s going on as part of their transaction (what we would usually call a “condition precedent”), because a CFIUS blessing can protect the transaction after the fact,” Hoeg told GameDaily. “Some types of investment mandate such a declaration, including transactions in which the acquiring party is owned in substantial part by a foreign state.”
With the caveat that the motivations of federal organizations like the CFIUS falls outside of his purview as an attorney, Hoeg said involvement of this body is typically relegated to a list of specific foreign states that “haven’t jumped through certain hoops to ‘bilaterally’ look out for issues with the US.” As of now, this list, which can be viewed here, includes only Australia, Canada, and the UK, the latter of which is where Sumo Group is headquartered.
“That said, China is of course one of those countries that US politics generally dictates gets an especially close look in practice,” Hoeg said.
In a letter to investors, Sumo Group noted that the acquisition required no investigation from any UK government bodies.
Sam, the Editor-in-Chief of GameDaily.biz, is a former freelance game reporter. He's been seen at IGN, PCGamesN, PCGamer, Unwinnable, and many more. When not writing about games, he is most likely taking care of his two dogs or pretending to know a lot about artisan coffee. Get in touch with Sam by emailing him at sdesatoff@rektglobal.com or follow him on Twitter.
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