Sony wants to be outbid on square from another buyer?
In big acquisitions the important thing isn't who outbids. When there are multiple companies who can pay enough, the decisions is what else in addition to the money that candidate can offer to help the company achieve its goals and grow.
Sony can help them in AAA development and marketing area, specially in their main platform (PS). Plus Sony is also interested on bringing their console IPs to mobile, as SE does (very successfully). Sony can help them also with cloud gaming, and with bringing their IPs to cinema/tv shows/anime/etc., can help them expand in markets where they want to grow like central and south America, or in new areas like AI. And well, they both are Japanese and have basically the same main shareholders, which helps.
Tencent instead would offer them other benefits, like helping them in China etc.
Any decent simcade studios out there?
I'd say no. Mostly because racing game sales are focused on a few IPs from major publishers: MK, both Forza, GT, Need for Speed, The Crew and maybe I forget maybe something else, but EA owns Codemasters.
But if it helps, Firesprite has a lot of former Evolution, Liverpool Studio and Bizarre Creations staff, with some more left at Lucid (and most of the other ones at Codemasters).