Update: Embracer Closes Gearbox Divestment

At the end of March, Embracer and Take Two Interactive announced the sale of Gearbox, including selected studios and IPs, for $460 million. Now all conditions for the deal have been fulfilled.

It was only at the end of March that Embracer announced the sale of its subsidiary Gearbox, including a number of studios and game brands, including Borderlands, to Take Two Interactive. The parties involved put the value of the deal at around $460 million. Less than three months later, Embracer has announced that the divestment of Gearbox has been closed. All conditions for the transaction have now been fulfilled and the transaction has been closed tobay.

Original news from 28 March 2024, 8:51 a.m.:

At the beginning of March, US blog Kotaku reported that an agreement on the sale of Gearbox was close (in German). The deal has now been completed. As announced by the companies involved, Embracer is selling Gearbox along with selected studio subsidiaries and IPs to Take-Two Interactive. The transaction is valued at $460 million and will be paid for in newly issued shares of Take-Two Interactive stock. Embracer intends to sell these shares quickly upon receipt in order to reduce its debt and increase liquidity. After deducting all costs associated with the sale, Embracer expects a net cash inflow of $300 to $350 million.

The deal includes Gearbox Software (Frisco, Texas), Gearbox Montréal and Gearbox Studio Quebec, as well as the IPs Borderlands and Tiny Tina's Wonerlands, Homeworld, Risk of Rain, Brothers in Arms and Duke Nukem. Embracer will retain Gearbox Publishing (formerly Perfect World Entertainment), which will be renamed, Cryptic Studios, Lost Boys Interactive and Captured Dimensions. The companies will be reassigned to other parts of the Embracer group. Embracer will also retain publishing rights to the Remnant franchise, Hyper Light Breaker and other games not yet announced. Together with Cryptic Studios, Embracer also retains the rights to the MMOs Neverwinter Online and Star Trek Online.

"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," says Lars Wingefors, co-founder and CEO of Embracer.

And Randy Pitchford, founder and CEO of Gearbox Entertainment, adds: "As a significant long-term Embracer Group shareholder, I believe in the strategy for the Embracer Group going forward and am completely convinced that this transaction is the best possible scenario and an obvious net positive arrangement for Embracer Group, for Take-Two and, of course, for Gearbox Entertainment. My primary interest is always Gearbox, especially our talent and our customers."

"Our acquisition of Gearbox is an exciting moment for Take-Two and will strengthen our industry-leading creative talent and portfolio of owned intellectual property, including the iconic Borderlands franchise," says Strauss Zelnick, Chairman and CEO of Take-Two. "This combination enhances the financial profile of our existing projects with Gearbox and unlocks the opportunity for us to drive increased long-term growth by leveraging the full resources of Take-Two across all of Gearbox’s exciting initiatives."

Gearbox has been part of the Embracer Group since February 2021 (in German) and has been strengthened and expanded through targeted acquisitions as part of its expansion strategy. For example, in December 2021 (in German), Embracer acquired Perfect World through Gearbox, which became Gearbox Publishing, but now remains part of Embracer. Lost Boys Interactive was acquired (in German) by Gearbox in 2022.

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