Embracer Group M&A Update: February 3, 2021

Key insights

5 takeaways

01
Embracer Group acquired Easybrain Group, The Gearbox Entertainment Company, and Aspyr Media for an aggregate day-one purchase price of approximately SEK 9.3 billion.See it on page 2
02
The acquisitions include a performance-based earn-out consideration of up to SEK 12.5 billion, contingent on the entities achieving over SEK 23 billion in accumulated operational EBIT over seven years.See it on page 8
03
The expansion increases Embracer’s portfolio to 244 intellectual properties and grows its total workforce to approximately 5,719 developers.See it on page 4
04
Post-transaction, the company operates 63 internal development studios and 73 external studios across eight distinct operational groups.See it on page 4
05
Embracer maintains a decentralized organizational structure with headquarters in Karlstad, Sweden, and reports approximately SEK 10 billion in available cash and credit facilities post-closing.See it on page 10

Summary

The February 2021 Embracer Group update outlines the strategic acquisition of Easybrain Group Limited, The Gearbox Entertainment Company, and Aspyr Media. The primary purpose of the communication is to provide stakeholders with an overview of the organizational expansion, financial structure, and operational integration resulting from these transactions. By incorporating these entities, Embracer Group aims to bolster its development capabilities and intellectual property portfolio, reinforcing its position as a diversified global gaming conglomerate.

The acquisitions significantly scale the company’s operational footprint. Post-transaction, the group’s internal development studios increased to 63, with external studios reaching 73, and the total number of intellectual properties rising to 244. The combined workforce expanded to approximately 5,719 developers. Financially, the aggregate day-one purchase price for the three entities is approximately SEK 9.3 billion, split between cash and newly issued B shares. An additional earn-out consideration of up to SEK 12.5 billion is contingent upon the acquired businesses achieving specific operational and financial milestones over a seven-year period, with a target of exceeding SEK 23 billion in accumulated operational EBIT.

The organizational structure remains decentralized, with the group headquarters in Karlstad, Sweden, overseeing eight distinct operational groups, including THQ Nordic, Koch Media, and the newly integrated units. The company maintains a capital allocation strategy focused on growth while prioritizing a strong balance sheet, reporting approximately SEK 10 billion in available cash and credit facilities post-closing. The information provided is intended for illustrative purposes regarding the combined group’s potential and is subject to the inherent risks and uncertainties associated with forward-looking financial projections and market integration.