INSIDE INFORMATION: Embracer Group has today entered into an agreement to divest Gearbox Entertainment, for a consideration of USD 460 million (SEK 4.9 billion) to Take-Two Interactive Software, Inc. (“Take-Two”). The proceeds from the deal will, upon closing, significantly reduce net debt, earnout obligations and capex. Embracer retains selected companies, including Gearbox Publishing San Francisco (to be renamed), with the publishing rights to the Remnant franchise, the upcoming Hyper Light Breaker and other notable unannounced game releases.
“Today’s announcement marks the result of the final structured divestment process and is an important step in transforming Embracer into the future with notably lower net debt and improved free cash flow. Through the transaction, we lower business risk and improve profitability as we transition to becoming a leaner and more focused company. After evaluating several options for Gearbox, I am happy that we have reached a solution that is in the best interest of all stakeholders. Randy and the team have been great team members throughout the past years, and I would like to thank them all for that. As one of the world’s greatest games developers, I am confident that Gearbox will continue to innovate and thrive in their new home within Take-Two,” says Lars Wingefors, co-founder and CEO of Embracer.
”As a significant long-term Embracer Group shareholder, I believe in the strategy for the Embracer Group going forward and am completely convinced that this transaction is the best possible scenario and an obvious net positive arrangement for Embracer Group, for Take-Two and, of course, for Gearbox Entertainment. My primary interest is always Gearbox, especially our talent and our customers. I want to personally assure fans of our games that this arrangement will ensure that the experiences we have in development at Gearbox will be the best they can possibly be,” says Randy Pitchford, founder and CEO of Gearbox Entertainment.
Transaction key components
Embracer financial impact
Illustrative financials for the period 1 January – 31 December 2023 (before any potential effects from the ongoing restructuring program after 31 December 2023):
SEK, million | Divested assets | Retained assets* | Divested assets % of group | Retained assets % of group | Group total, incl. divested assets |
Net sales[1] | 1,680 | 2,011 | 3.9% | 4.7% | 42,687 |
Adjusted EBIT | -30 | 197 | -0.5% | 3.0% | 6,552 |
EBITDAC[2] | -809 | -117 | -26.8% | -3.9% | 3,024 |
Capex | -941 | -508 | 12.1% | 6.5% | -7,803 |
# total headcount[3] | 1,336 | 760 | 8.8% | 5.0% | 15,218 |
Book value of ongoing game development projects | 990 | 580 | 10.2% | 6.0% | 9,728 |
Closing of the transaction
Closing of the transaction is expected to take place in Q1 FY 2024/25 and is conditional upon customary conditions including regulatory approvals such as merger control clearance.
Investor presentation
Embracer Group will hold a webcast presentation for investors, analysts, media and other stakeholders on 28 March at 09.00 CET. Please find more information in a separate distributed invitation that will follow this release.
Advisors
Goldman Sachs Bank Europe SE Sweden Bankfilial and Juno Capital Partners are acting as joint financial advisers and Fenwick is acting as legal counsel to Embracer Group in the transaction. Ernst & Young has provided services for financials and tax.
For more information, please contact:
Oscar Erixon, Head of Investor Relations Embracer Group AB (publ)
Tel: + 46 730 24 91 42
Email: oscar.erixon@embracer.com
Arman Teimouri, Head of External Relations Embracer Group AB (publ)
Tel: +46 793 33 05 60
E-mail: arman.teimouri@embracer.com
About Embracer Group
Embracer Group is a global Group of creative and entrepreneurial businesses in PC, console, mobile and board games and other related media. The Group has an extensive catalog of over 900 owned or controlled franchises. With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its twelve operative groups: THQ Nordic, PLAION, Coffee Stain, Amplifier Game Invest, Saber Interactive, DECA Games, Gearbox Entertainment, Easybrain, Asmodee, Dark Horse, Freemode and Crystal Dynamics – Eidos. The Group has 132 internal game development studios and is engaging more than 15,000 employees in more than 40 countries.
Embracer Group’s shares are publicly listed on Nasdaq Stockholm under the ticker EMBRAC B.
Subscribe to press releases and financial information: https://embracer.com/investors/subscription/
[1] Net sales includes intercompany transactions within Embracer.
[2] EBITDAC = Adjusted EBITDA less Gross investment in intangible and tangible assets.
[3] Total headcount includes externally funded game developers, internal game developers, internal employees, and non-development, as of December 31, 2023. –
Embracer Group is a global group of creative and entrepreneurial businesses in PC/console, mobile and board games and other related media. The Group has an extensive catalog of over 900 owned or controlled franchises.
With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its ten operative groups: THQ Nordic, PLAION, Coffee Stain, Amplifier Game Invest, DECA Games, Easybrain, Asmodee Group, Dark Horse Media, Freemode and Crystal Dynamics – Eidos. The Group has 103 internal game development studios and is engaging more than 10,000 employees in more than 40 countries.