Embracer Group Considers Selling Gearbox Entertainment, Reports Say

Sweden-based Embracer Group is Europe’s largest gaming company, and right now, its financials are not looking good. Their large portfolio of gaming studios, instead of generating extra revenue, has become a burden on the company’s operational costs. This led to the initiation of a restructuring program in June 2023 to cut costs by laying off employees, canceling projects, and shutting down gaming studios to stay afloat.

Amid all of this, the latest report from Reuters suggests that Embracer Group is considering selling one of its high-profile studios, Gearbox Entertainment. 

For those who don’t know, Gearbox Entertainment is a U.S.-based game developer best known for its first-person shooter game series, Borderlands. Embracer acquired Gearbox Entertainment in February 2021 in a deal valued at up to $1.4 billion.

Sources familiar with the matter have told Reuters that Gearbox has caught the attention of international gaming groups who are willing to buy the studio. However, the sources have also reiterated that the sale is being considered at this stage only, and it is still not confirmed whether it will go through or not. For now, Embracer is seeking advice from financial firms Goldman Sachs and Aream & Co as it evaluates its next steps.

Embracer is weighing selling the unit, which is known for the first-person shooter game Borderlands, after receiving interest from third parties, two of the people said.”

Report via Reuters

Adding to the information, sources have also revealed that the potential buyers already have access to Gearbox Entertainment’s marketing material.

This news follows Embracer’s recent efforts to bolster its financial standing. As mentioned above, in June, the company announced a comprehensive restructuring plan, the purpose of which was to reduce Embracer’s net debt from SEK 16.7 billion to less than SEK 10 billion by the end of its financial year.

Embracer, with a portfolio boasting over 900 owned franchises, had previously announced reaching a verbal commitment with an undisclosed party in October 2022, which was expected to generate over $2 billion in contracted development revenue over a six-year period. However, the company disclosed later that it had received a negative outcome from the counterparty, causing its shares to plummet by more than 40%.

A report later revealed that it was Saudi Arabia’s Savvy Games Group who pulled out of a $2 billion deal with Embracer Group as a result of failed negotiations.

The future is indeed looking uncertain for the Embracer Group. We will keep you posted as Embracer tries to navigate its way out of this challenging time. Until then, let us know your thoughts about this news in the comments section below.