Listed Sumo Group swoops for Huddersfield games studio in £2m deal

Sumo’s three founders front to back – Carl Cavers, Darren Mills and Paul Porter

Sheffield-headquartered video games and entertainment developer, Sumo Group, has acquired a Huddersfield games studio firm for £2m.

The listed firm has bought Red Kite Games, a work-for-hire studio focusing on engineering and code support services, as part of its growth strategy through increased capacity and access to a new talent pool in West Yorkshire.

Red Kite is well known to Sumo Digital, as the two companies have worked together for several years, collaborating on a range of titles. Sumo Digital has in the last 12 months accounted for around 40% of Red Kite’s sales with the other 60% coming from projects that are not publicly disclosed.

Established by ex-Rockstar Games developer Simon Iwaniszak in 2012, Red Kite is a work-for-hire studio, providing game development services and code solutions to the video games industry. The business operates from a single studio in Huddersfield,employing 27 people.

In the year ended 31 January 2018, Red Kite reported EBITDA of £400,000 on revenue of £900,000. Both revenue and profit are expected to be lower in the year to 31 January 2019, due to the application of resource on an own-IP project.  Red Kite is expected to contribute £200,000 to Sumo Group EBITDA in the 11 months to 31 December 2019.

Carl Cavers, Chief Executive Officer of Sumo Group, said: “Red Kite is an established brand with talented people, providing engineering and code support services to some of the biggest names in the industry. Simon and his team are already well known to us and we are confident that Red Kite will integrate quickly and successfully. On behalf of the whole Group, I extend a warm welcome.”

Simon Iwaniszak, Studio Director of Red Kite, added: “We are very much looking forward to being part of Sumo Group. Sumo Digital is such an exciting business, working on incredible projects. Being part of a creative, ambitious and supportive Group, which is delivering great results, will present new opportunities and new challenges to Red Kite. We have exciting plans for the studio and believe that Sumo Group will help us to achieve our full potential.”

Red Kite’s development team works with some of the industry’s best-known publishers and developers, most recently Codemasters on DiRT 4, Sony Computer Entertainment (SCE) on God of War III: Remastered and Activision on Call of Duty: Strike Team.

The business will continue to operate under the Red Kite name, as a wholly owned subsidiary of Sumo Digital – which has just completed its first year of trading on the stock markets after floating in December 2017.

The share capital of Red Kite was owned by certain of its Directors and employees, including the company’s founder Iwaniszak.

Iwaniszak, David Roberts and Andrew Greensmith, three of Red Kite’s former shareholders, have entered into new service agreements and will be issued with options over Sumo Group shares under the Company’s Long-Term Incentive Plan.

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