[UPD] Embracer Group considering selling Gearbox Entertainment, as its restructuring continues to affect more studios
The ongoing restructuring at Embracer Group has already affected several subsidiaries of the Swedish holding company. The latest report indicates that Gearbox Entertainment could also be in danger.
What happened?
- As reported by Reuters, Embracer Group is now working with Goldman Sachs and Aream & Co to explore a sale of Gearbox Entertainment, the US developer and publisher it acquired for $1.38 billion in 2021.
- According to two people familiar with the matter, the Swedish holding company received “interest from third parties.” However, other details about the potential sale of Gearbox remain undisclosed.
- Shortly after the Reuters report, Embracer shares jumped 5%, from the previous close of SEK 25.81 ($2.33) to SEK 27.15 ($2.45). But the company is still struggling in the stock market, as the $2 billion deal that collapsed earlier this year sent its share price tumbling.
Embracer Group share price nearly halved in price on May 24 after the company told investors about the collapsed deal
- The news about the potential sale of Gearbox Entertainment follows last week’s report about layoffs at its publishing division. The extent of the job cuts is unclear, but it appears Gearbox Publishing started preparing for this move about two months ago.
UPDATE (September 12): Gearbox chief communications officer Dan Hewitt commented on the Reuters report in an email to staff (obtained by Bloomberg). “The base case is that Gearbox remains a part of Embracer,” he said, adding that “there are many options under consideration, including Gearbox’s transfer, taking Gearbox indepdendent, and others.”
Embracer Group’s restructuring program continues to affect its internal studios
- On September 11, Game Developer reported that Embracer Group laid off some employees at Rainbow Studios, a THQ Nordic subsidiary best known for the MX vs ATV series.
- Former QA analyst Austin Herrington wrote on LinkedIn that the studio “has been affected by the Embracer Group restructuring.” Other laidoff employees include technical artist Thomas Tobin, level Zac Bogner, and artist Molly Cuddihy.
- Embracer Group announced its restructuring program in June, citing the collapse of that $2 billion deal as the main reason. It was later revealed that this partnership was supposed to be with Savvy Games Group, an investing arm of Saudi Arabia’s sovereign wealth fund.
- The restructuring goal is to lower the company’s net debt from $1.53 billion to at least $732 million and generate more profits with less and higher margins in the PC and console markets. It also involves divestment of some studios, layoffs, and the shutdown of certain games, among other cost-cutting initiatives.
- Last month, Embracer closed Campfire Cabal, a first-party studio that existed for less than a year under THQ Nordic. Among the victims of the restructuring program was also Volition Games, a developer with a 30-year history best known for the Red Faction and Saints Row series.
