Sheffield video game developer agrees its biggest acquisition to date

Video game developer Sumo Group has signed a contract to acquire Lake Street Labs , the owner of developer Pipeworks, for an enterprise value of up to $99.5m, with an initial consideration of $59.5m.
Carl Cavers, CEO of Sumo Group: "The acquisition gives us an instant, established and significant presence in the important North American market".Carl Cavers, CEO of Sumo Group: "The acquisition gives us an instant, established and significant presence in the important North American market".
Carl Cavers, CEO of Sumo Group: "The acquisition gives us an instant, established and significant presence in the important North American market".

The move gives Sheffield-based Sumo a "significant presence" on the West Coast of the US enabling better access and support to existing and potential new clients based in North America.

Sumo also revealed that revenue increased by 26.7 per cent to £26.3m in the six months ended June 30, 2020. Pre-tax profit more than doubled from the same period last year to £2.8m.

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Carl Cavers, CEO of Sumo Group, said: "We are delighted to announce the acquisition of Pipeworks, the largest acquisition Sumo Group has made since IPO.

"The acquisition gives us an instant, established and significant presence in the important North American market, with improved access to both new and existing clients and markets."

Pipeworks was founded in 1999 and is based in Eugene, Oregon. It provides full development, co-development, and live operations to video game publishers and other partners.

Since its foundation, Pipeworks has shipped close to 100 games and advanced technology solutions to nearly 50 clients and partners.

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Sumo will use $35m from its existing cash resources for the initial consideration and $24.5m will be satisfied through the issue of new equity in the group.

Lindsay Gupton, CEO of Pipeworks, said: "We are absolutely thrilled to be joining Sumo Group. Our ambition is to be the best and most innovative game developer in North America and this will be a 'level-up' for all of us at Pipeworks.

"I've known Carl and the team at Sumo for a long time and have the greatest respect for them as a company, as game developers, and most importantly, as people.

"The cultural fit between Pipeworks and Sumo is remarkable, and we all love to make great games with great partners. I can't wait for this next big chapter in the long history of Pipeworks."

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The acquisition is expected to be significantly earnings enhancing in the year ending December 31, 2021 - the first full year of ownership - Sumo Group said.

The deal is expected to complete by the end of October 2020.

Mr Cavers said: "Having known Lindsay for a long time and been a keen follower of Pipeworks, I am naturally delighted to welcome Lindsay and his team to Sumo Group and look forward to working together and sharing an exciting future. This is a major step forward for our business.

"Sumo Group is thriving. Our underlying market is very strong, and we are seeing good opportunities for new games, including Original-IP developed by our talented studios. I would like to thank our team, once again, for their great work, which continues to drive the group's success."

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The Sheffield-based firm has enjoyed an incredbly busy year so far with seven games launched or announced to date, including four of it own IP games - Spyder, Little Orpheus, WST Snooker and Hood.

Sumo completed its acquisition of Lab42 in May 2020, adding 29 people. Headcount increased by 66 to 832 at June 30, 2020.

It has signed several significant contracts recently, despite the restrictions on travel and cancelled trade events.

Mr Cavers said: "More people than ever are playing video games, as a result of the pandemic, and the market outlook remains extremely positive.

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"Our talented teams continue to produce high-quality, interactive content, which is well received by gamers across the globe.

"We are absolutely delighted with the achievements of our people under challenging circumstances, and, with strong visibility for financial year 20, remain very confident in the group's prospects.

"As a group, we remain well positioned to capitalise on the expansion in the market and remain focused on delivering further growth both organically and, as demonstrated by the announcement of Pipeworks today, via acquisition."

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