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Sumo Group acquires award-winning development studio The Chinese Room

The AIM-listed firm said it had acquired the company from its founders for £1.6mln in cash, with the remaining £0.6mln paid through the issue of new shares in Sumo

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Co-founder of The Chinese Room, Dan Pinchbeck, has also joined Sumo as a creative director

Sumo Group PLC (LON:SUMO) has acquired the award-winning game development studio The Chinese Room for £2.2mln.

The AIM-listed creative and development services provider of video games said it had acquired the company from its founders for £1.6mln in cash, with the remaining £0.6mln paid through the issue of new shares in Sumo to the sellers on completion.

READ: Sumo Group shares jump following in-line trading update ahead of interims

The Chinese Room is most well-known for games such as Dear Esther and Everybody’s Gone to the Rapture, releases under the so-called ‘walking simulator’ genre, with the latter receiving three BAFTAs.

Sumo added that the acquisition would incur a small operating loss through the remainder of 2018 due to new staff recruitment, but that it would be profitable in 2019.

The company also said that one of the co-founders of The Chinese Room, Dan Pinchbeck, had joined Sumo as creative director of the acquired company and would be issued with options over Sumo shares.

Sumo chief executive, Carl Cavers, said the acquisition would “enhance and extend Sumo Digital's capabilities, as well as bringing new intellectual property and accelerating our own IP pipeline”.

In a note to clients, analysts at City broker Peel Hunt commented that the purchase was a benefit to Sumo, "given the increased relevance of ... immersive experiences as VR becomes more prevalent".

They added that the IPs held by The Chinese Room would help Sumo generate revenues and "accelerate its own IP pipeline, with at least two original concepts currently under development".

In mid-morning trading Tuesday, Sumo shares were up 1.4% at 170p.

-- Adds broker comment and share price --

Quick facts: Sumo Group PLC

Price: 155.5 GBX

AIM:SUMO
Market: AIM
Market Cap: £234.18 m
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