WGB

, , , ,

Embracer is planning on splitting into three separate companies

Despite previously saying that it had finished its restructuring process, Embracer has announced a massive shift in its business: the company intends on splitting into three separate companies, each run independently of the others.

Wolf’s Gaming Blog
4 minutes

Despite previously saying that it had finished its restructuring process, Embracer has announced a massive shift in its business: the company intends on splitting into three separate companies, each run independently of the others.

Embracer announced this latest undertaking this morning in several press releases detailing how the company will become Middle-earth Enterprises and Friends, Coffee Stain and Friends, and Asmodee Group. Each new group will be listed separately on the Stockholm stock exchange, and it was noted that each group’s name may yet be changed.

https://platform.twitter.com/widgets.js

The existing Embracer Group is to be renamed to Middle-Earth Enterprises and Friends and will essentially be the triple-A focused company, with the likes of The Lord of the Rings and Tomb Raider coming under its purview. Embracer describes it as a “creative powerhouse in AAA game development and publishing for PC and console, as well as the stewards of The Lord of the Rings and Tomb Raider intellectual properties”.

The likes of Crystal Dynamics, 4A Games, Tripwire, Vertigo Games and Warhorse Studios will all fall under the new Middle-Earth Enterprises and Friends group, along with Dark Horse Comics. That means IP like Metro, Dead Island, Kingdom Come: Deliverance and more will be developed and published under Middle-Earth.

The Asmodee Group will peel off from Embracer within the next 12 months and will continue its focus on tabletop gaming. It’s through Asmodee that Embracer also announced it had entered into a new financing deal with JP Morgan, BNP Paribas, SEB, Societe Generale and Swedbank for a total of EUR 900 million. Embracer describes this as “important part of the debt refinancing”.

Embracer has been suffering from a massive debt crisis ever since a massive deal with Saudi Arabia fell through, and has resulted in Embracer shutting down studios and laying off staff. Of course, taking on more debt to tackle existing debt reeks of irony, but in the business world it makes sense. Indeed, even in the regular world of us mere mortals it’s a commonly used tactic – think moving a credit card balance to another card.

As for Coffee Stain & Friends, it will split off in 2025 and operate under two segments: premium and free-to-play, and it described as being the indie/doube-A group. It will be made up of Coffee Stain, THQ Nordic, Amplifier Game Invest, Ghost Ship, Tarsier, Tuxedo Labs, and more. In terms of games, the lineup includes Deep Rock Galactic, Wreckfest, Teardown, Star Trek Online and many, many more.

This move could be a stroke of genius that will help Embracer finally get back on track. On the other hand, the decision to split into three smaller groups could also be viewed as a method to attract potential buyers. This is, of course, purely speculative.

“This move has been made with the intention to unleash the full potential of each team and provide them with their own leadership and strategic direction. This is the start of a new chapter, a chapter that I intend to remain part of as an active, committed, and supportive shareholder of all three new entities, with an evergreen horizon. This move towards three independent companies reinforces Embracer’s vision of backing entrepreneurs and creators with a long-term mindset, allowing them to continue to deliver unforgettable experiences for gamers and fans across the globe”, says Lars Wingefors, co-founder and Group CEO of Embracer Group in a press release.

In an open letter, Lars Wingefors talked about the decision to split into three groups:

“History has shown that diversified groups like ours can significantly enhance their chances of success by adopting a more agile, fast-moving approach and focusing on well-defined core market segments.

“Numerous inspiring examples from Sweden illustrate how large enterprises have achieved greater success by dividing into multiple separate specialized companies. I am deeply motivated and inspired by these success stories and believe they offer valuable insights for our own strategic direction. The time is right for Embracer to become three public companies, each boasting sufficient scale, coherent strategies, specialized business models and empowered by visionary leadership teams. Rather than imposing conformity on thriving businesses, we should foster an environment that amplifies existing success. I am confident that this will be easier with three distinct winning formulas in specific market segments.”

Recently, Embracer Group sold Borderlands developer Gearbox to Take-Two. Saber Interactive was also sold off to itself, allowing the company to become independent. Before that, numerous companies were shut down in a bid to reduce Embracer’s spiralling debt problems after the group spent years and years buying entities at an obscene rate. Saints Row developer Volition was shuttered, as was Free Radical Design and many more.

Trending