Tencent now in driving seat to acquire Splash Damage and Digital Extremes

[UPDATE] In a move that should come as absolutely no surprise to anyone, it now looks like Tencent will be the one to acquire Leyou Technologies – the parent company of both the UK’s Splash Damage and Canada’s Digital Extremes – placing the Xbox work-for-hire regulars and the Warframe developer under the Chinese goliath’s control.

Leyou sent out a note to investors late last week stating that it had entered a three-month exclusivity agreement with Tencent to allow negotiations to continue without the uncertainty of other potential buyers cutting in. It now seems almost certain that Tencent will buy the company and add it to its ever-growing gaming riches.

[ORIGINAL STORY] Splash Damage, the UK developer recently responsible for Gears Tactics could be acquired by Sony, which is interested in its parent company, Leyou Technologies – which bought the studio back in 2016.

That’s according to a report from Bloomberg, quoting “people familiar with the matter.” That would take one of Xbox’s key third-party development partners and place it under the control of PlayStation. Although there is competition to buy Leyou, which also includes Warframe developer Digital Extremes.

Splash Damage, based in Bromley in south-east London, has previously worked on numerous Xbox projects for Microsoft, including Gears 4 and 5 and the Halo: Master Chief Collection. It specialises in multiplayer, but its recent, critically acclaimed move into strategy proves it’s a very capable all-around studio able to develop games from initial concepts right through to release.

Leyou has been in discussions with other potential buyers for some time, with iDreamSky being in the driving seat (which itself has Tencent as a major investor). iDreamSky was working with CVC Capital Partners to make a joint bid, which valued Leyou at $1.23 billion, but the pandemic brought their talks to a stalemate, reported Bloomberg back in April.

“Sony is hoping that it can edge out other bidders with greater certainty of financing, the people said. Leyou’s [controlling shareholder Charles] Yuk aims to choose a buyer and sign an agreement as soon as this month, the people said. Talks are still ongoing and no final decision has been made, the people said. Other bidders could still emerge, they said. Representatives for Leyou and Sony declined to comment,” reported Bloomberg.

Of course with Microsoft having gone on a major spending spree in 2018 and 2019 to bulk up its Xbox Game Studios – in order to feed Game Pass and the next-gen – it does now have 15 internal studios to call upon, so such a move wouldn’t exactly leave it short-handed.