Embracer Explores Selling Gearbox Entertainment
Sweden's leading gaming company, Embracer, is falling on hard times and now reportedly weighing up various options for its US-based game developer, Gearbox Entertainment. These options may include a sale of the renowned developer, known primarily for the first-person shooter game, Borderlands. This strategic move is seen as a step by Embracer to bolster its financial position. According to sources familiar with the developments, this decision has been influenced by interests from third-party entities.
Embracer, listed on the Stockholm stock exchange and famed for the latest Tomb Raider game, is said to be in partnership with Goldman Sachs and Aream & Co. to delve into the potential sale. Embracer's strategic acquisitions last year encompassed multiple development studios along with the rights to numerous games, prominently, a new Tomb Raider iteration.
Following the news, Embracer's stock surged, marking an increase of up to 5%, and concluded at SEK 27.40 on the subsequent Monday.
Earlier in June, Embracer rolled out its restructuring plan aimed at slashing its net debt to under SEK 10 billion ($903 million) by its fiscal year-end, from its standing of SEK 16.7 billion as of the end of June. CEO Lars Wingefors attributed these shifts, encompassing studio shutdowns, terminated projects, and workforce reductions, to a particularly "arduous year" for the gaming giant.
Last year, in a remarkable move, Embracer had acquired Gearbox at a valuation soaring up to $1.4 billion. Presently, promotional materials from Gearbox are in circulation among prospective buyers, predominantly international gaming conglomerates. However, insiders, who wished to remain unnamed, emphasized that this potential deal is still tentative.
Gearbox, integrated under Embracer’s PC console games section, recently launched its title, Remnant 2, which clinched the top position in the US charts for July.
Furthermore, last November, Embracer initiated a comprehensive review of its vast business landscape, housing over 900 franchises, to adeptly navigate the intricate economic terrain, possibly leading to divestitures of certain units.
Lastly, Embracer disclosed in May that it had almost sealed a deal in the preceding October that would have yielded more than $2 billion "in contracted development revenue" spread over six years. Yet, this promising arrangement fell through at the eleventh hour, leading to a staggering plunge of over 40% in its shares.
Note: Conversion rate used is $1 = 11.0786 Swedish crowns.
Information courtesy of Reuters.