Embracer's $247 million sale of Saber Interactive detailed: divested studios, games, and exit from Russia
Embracer Group has officially announced the divestment of one of its key operative groups, Saber Interactive. The Swedish holding company, however, will retain some of the assets and games in development.
The article has been updated to include additional details obtained by Jason Schreier.
Embracer’s divestment of Saber Interactive: financial details
According to a new blog post, Embracer Group will sell selected parts of Saber Interactive for SEK 2.52 billion ($247 million) to Beacon Interactive, a company controlled by Saber co-founder Matthew Karch.
Embracer will also be entitled to additional compensation of up to SEK 962 million ($94 million) if Beacon resells the acquired assets for a higher price.
“I am pleased that we have found a win-win solution for Embracer and the parts of Saber that now will leave us. This transaction puts both companies in a stronger position to thrive going forward,” Embracer CEO Lars Wingefors said, adding that “this is the first transcation of the previously mentioned structured processes.”
Following the deal, Embracer’s net debt will be reduced by SEK 2.1 billion ($205 million). It is worth noting that the primarily goal of the ongoing restructuring is to reduce the company’s net debt to at least SEK 8 billion ($760 million). But Wingefors said last month that the target is “unlikely to be reached,” hinting at further divestments after the program ends on March 31, 2024.
The Saber divestment will also allow the Swedish holding company to cease all operations in Russia, the base of Saber’s largest office, saying that it will “immediately” improve its cash flow, reduce capex, net debt, and future liabilities.
“All Russian employees have been transferred to new entities that are wholly owned by local management that work exclusively with the Buyer,” the company noted. “Embracer will initiate a liquidation process to dissolve any Russian companies in accordance with Russian legislation.”
What assets will Saber Interactive get after splitting from Embracer Group?
Beacon Interactive will become the owner of all studios working under the Saber Interactive brand and some of its subsidiaries:
- Digic;
- Fractured Byte;
- Mad Head Games;
- New World Interactive;
- Nimble Giant;
- Sandbox Strategies;
- Slipgate;
- 3D Realms.
In addition, Beacon will receive “certain proprietary engine technology and game tools relating to the divested companies” and 38 games in development with a total value of SEK 2.3 billion ($224 million). This is 22% of Embracer’s pipeline of 179 projects.
The total headcount of divested studios amounts to 2,950 employees, or 21% of Embracer’s workforce of 14,140 people.
What assets will Embracer Group retain following the Saber divestment?
Embracer will retain the following studios with a total headcount of 800 employees:
- 34 Big Things;
- 4A Games;
- Aspyr;
- Beamdog;
- Demiurge;
- Shiver;
- Snapshot;
- Tripwire;
- Tuxedo Labs;
- Zen Studios.
Beacon Interactive will have an option to acquire 4A Games and Zen Studios for a fixed price. The terms are undisclosed, but the exercise price reflects at least the studios’ market value and is significantly higher than their current net book value of SEK 829 million ($81 million). But even if Beacon uses the option, Embracer’s operative group Plaion will retain the publishing rights to the Metro franchise.
According to Jason Schreier, Beacon has already agreed to acquire 4A Games and Zen Studios through options, which should bring the total purchase price to $500 million previously reported by Bloomberg.
The Swedish holding company will also retain 14 games in development, including two joint projects with Saber Interactive, with a total value of around SEK 500 million ($48.7 million).
The list includes the next AAA title from 4A Games, Killing Floor 3, a previously announced AAA game based on a major license (could be either Warhammer 40k: Space Marine 2 or the Star Wars: KOTOR remake*), Tuxedo Labs’ Teardown, new titles from Asmodee and 34 Big Things, and all back catalog and future games from Zen Studios, Aspyr, and Tripwire.
*Schreier also noted that Saber will continue to work on the KOTOR remake.
