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Embracer will retain ownership of Gearbox Publishing, as well as other developers which will be folded into Embracer.
Image credit: Gearbox
Embracer Groups is divesting itself of Gearbox for 460 million dollars, according to an official Embracer Group press release. Gearbox - creator of Borderlands, Risk of Rain, and more video game IPs - will be aquired by Take Two and paid entirely with newly created Take Two shares.
When it comes to exactly what Embracer is selling, this includes Gearbox Software, Gearbox Montréal, Gearbox Studio Quebec and well as various IP like Borderlands, Homeworld, Risk of Rain, Brothers in Arms and Duke Nukem. However, Embracer will be keeping its grip on Gearbox Publisher (soon to be renamed following the sale), Cryptic Studios, (Neverwinter Online and Star Trek Online), Lost Boys Interactive and Captured Dimensions. These developers will be folded into the Embracer company proper following the sale.
Back in 2021, Embracer group bought Gearbox for $1.3 billion. $363 million was upfront, split 50 / 50 between cash and Embracer shares. There was then rougly $1 billion up for grabs if Gearbox hit several targets within six years, though there is no mention on whether these targets were hit by Gearbox since being acquired. Randy Pitchford will remain CEO of Gearbox as the company jiggles under Take Two's umbrella.
These shares, according to the official release, will be entirely used to square of debt obligations that Embracer currently has. The release states, "Today’s announcement marks the result of the final structured divestment process and is an important step in transforming Embracer into the future with notably lower net debt and improved free cash flow. Through the transaction, we lower business risk and improve profitability as we transition to becoming a leaner and more focused company."
It's worth noting that these shares may very well prove profitable in the coming years, as Take Two is the publisher of a little game you may have heard of called Grand Theft Auto 6. So while the drastic difference in how much paid for Gearbox and the selling price (which is massive), it's worth remembering that $460 million dollars worth of Take Two shares should grow in the near future. Will it grow enough to match or exeed the initial investment in Gearbox? It seems a steep hill to climb.
Embracer notably has found itself in a truly rough spell, which ahs resulted in industry-shaking layoffs that have proven disastrous for the video game indsutry as a whole. These include (but are absolutely not limited to) laying off 100 staff and cancelling a Deux Ex game back in January, as well as 3D realms in December.
While Embracer has not released any statement apart from its press release, Randy Pitchford gave the following statement to Kotaku back in February, "I’m delighted that what we might be up to is interesting enough to people that you want to make a story about us for your readers. I’m honored and humbled that our company is a topic of rumor, speculation, and discussion. As always, we will be thrilled to share whenever we have projects to announce or news to share as we work hard towards our mission to entertain the world." That statement may have been somewhat vague, but Kotaku's reporting has been proven right in the weeks following its publciation.
As for how much water Embracer can continue to bail out in the wake of a troubling financial period remains to be seen, but with one of its bigger acquisitions running out the door, it's hard to imagine faith in the company being restored anytime soon. Just look at recent statements from developers at the Game Developer Choice Awards!
