22 Apr — 28 Apr / 2024

Weekly News Digest #17


# of announced deals
announced deals’ size
# of closed deals

Global Gaming Deals Report Q1'24
Embracer Group Splits into Three Separate Companies


Q12024 Deals Report Cover

Global Gaming Deals Report Q1’24

Last week, we published our Global Gaming Deals Report for Q1’24. This report provides insights into the gaming industry’s current market dynamics. Overall, we anticipate a potential stabilization in dealmaking activity, which may exceed pre-pandemic levels. This report highlights a period of strategic recalibration, focusing on capital efficiency and sustainable growth amidst ongoing economic pressures.

You can download the report by pressing the button below:

This report represents a significant step forward for us, as it’s the first time we’ve gone beyond just looking at investment and M&A activities. This time, we presented the dynamics of PC & Console and Mobile markets and explored their broader trends and challenges. We’d like to thank our partners at VG Insights and AppMagic for supplying us with current and detailed data about these sectors.

Embracer Group Splits into Three Separate Companies

Embracer Group Splits into Three Separate Companies

Sweden-based gaming giant Embracer Group (STO: EMBRAC B) has announced its intention to dissolve into three separate publicly listed entities — Asmodee GroupCoffee Stain & Friends, and Middle-earth Enterprises & Friends.

The division process is set to conclude within 12 months for Asmodee and by the end of 2025 for Coffee Stain & Friends. The two new entities will be listed on Nasdaq Stockholm, while the remaining divisions of Embracer Group will be rebranded as Middle-earth Enterprises and Friends. This reorganization aims to optimize the capital structure and enhance the long-term growth potential for each division.

Lars Wingefors, the primary shareholder, intends to retain a significant ownership position and extend support to all three entities. The transformation plan has received substantial backing from shareholders, representing over 50% of capital and votes in Embracer Group.

There has been a lot of news surrounding Embracer Group lately, so here’s a brief overview of recent developments:

— From 2020 to 2022, Embracer Group was the most active acquirer in the gaming industry: over 65 acquisitions for a total disclosed value of over $8.9B. Its aggressive M&A strategy led to the company growing twelve huge operating groups managing hundreds of projects simultaneously. You can read more about this stage of the company in our piece for Naavik. Back then, we expressed our concerns about the company’s future and predicted the inevitable need for selling some of the acquired business to optimize the structure of the holding;
— In Jun’22, Embracer raised $1B from Saudi Arabia-based Savvy Games Group, a subsidiary of Saudi Arabia Public Investment Fund;
— In 2023, the same investor, Savvy Games Group, was rumored to be about to invest another $2B into Embracer. However, the deal fell through, causing a rapid fall of the Embracer’s stock and marking the start of the company’s crisis;
—In Jun’23, the company announced a restructuring program, intending to cope with an internal crisis by mainly cutting costs and raised ~$183m a month later to support the process;
— In Mar’24, Embracer sold Saber Interactive and Gearbox Entertainment, two of its largest PC & Console divisions.

Multiple factors drove the sale of Saber Interactive and Gearbox Entertainment, which we analyzed in our previous digests. In short, beyond merely reducing costs and divesting large units, the move aimed to save these subsidiaries and provide them with fresh opportunities for growth. Therefore, what appeared to be the restructuring was only the preparation for a more significant move: a division of the holding into three public companies.

Embracer Financials Dec'23
Source: Embracer Group

Examining these entities will provide clearer insights into the strategic rationale behind this decision.

Asmodee Group: Board Games Company With The Largest Net Sales in the Group

Asmodee is a France-based tabletop games publisher with 23 subsidiary studios and over 300 IPs onboard. Among the company’s best-known games are Ticket to Ride7 WondersAzul, and Catan. In addition, Asmodee creates board games based on licensed franchises like The Lord of the RingsMarvelGame of Thrones, and Star Wars. Collaboration with IPs like Middle-earth will continue post-spinoff.

In 2023, the company reported Net sales of ~$1.36B (SEK 14.8B) — the best result among the three companies Embracer is splitting into. Another sign of Asmodee’s success is the interest it got from the investors. This is the only division raising money among the spin-off: the new loan agreement with 18 months maturity will provide the company with $963.7m (€900m) from several banks: JP MorganBNP ParibasSEB GroupSociete Generale, and Swedbank. In preparation for Asmodee’s spinoff, Embracer will also renegotiate the earnout structure with Asmodee’s management.

In short, the deal aims to improve the company’s margins and cash flow and accelerate its further growth via M&As, but we will discuss the rationale behind the spinoff after this analysis.

Coffee Stain & Friends: Mobile, Indie, and AA Division

Headquartered in Sweden, Coffee Stain & Friends will have over 200 IPs under its wing and will focus its work on two main segments:

— Premium operations primarily focus on PC & Console Indie and AA projects. It includes companies like Coffee Stain, Ghost Ship, Tarsier, Tuxedo Labs, THQ Nordic, Amplifier Game Invest, and franchises like Deep Rock Galactic, Goat Simulator, and Valheim.
— Free-to-play operations with a mobile focus. Companies working on this segment include Easybrain, Deca, CrazyLabs, and Cryptic.

In 2023, the company reported Net sales of ~$1B (SEK 10.9B), and Adj. EBITDA of ~$385m (SEK 4.2B). It is the smallest company regarding Net Sales, but the best regarding Adj. EBITDA, and 25% margin.

Middle-earth Enterprises & Friends: AAA Powerhouse

Based in the US, Middle-earth Enterprises & Friends will accumulate the remaining AAA studios in projects from Embracer Group.

The new entity will consist of such studios as Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Flying Wild Hog Studios, Tripwire, Vertigo Games, Warhorse Studios and 4A Games, PLAION, Freemode, and Dark Horse. In 2023, this group of companies reported Net sales of ~$1.3B (SEK 14.1B), and Adj. EBITDA of ~$375.8m (SEK 4.1B).

The company will own rights for such franchises as Lord of the Rings, Tomb Raider, Dead IslandKilling FloorKingdom Come Deliverance, Metro 2033, and others.

The Strategy Behind the Split or How to Get Rid of Negative Synergy

The main goal behind the deal is close to the rationale behind the sale of Saber and Gearbox: to optimize operations and eliminate interdependencies among the companies.

Embracer Group StockSource: Yahoo Finance. Currency: SEK

Embracer Group’s Board of Directors highlights the following strategic points:

— The scale and operational clarity of each entity will be enough to attract a broader investor base;
— The independence will enable each company to utilize its balance sheets, financial and strategic targets to accelerate growth;
— The streamlined approaches will allow the companies to focus on certain operations;
— The entities will continue collaborating on market terms for IPs, companies, and talent.

The best illustration of independence’s opportunities is the substantial $963.7m raised by Asmodee. It’s hard to imagine Embracer Group securing such a loan amidst its restructuring. By separating from Embracer, however, Asmodee is better positioned to attract investors and partners keen to support its core mission of board game production.

The same applies to Coffee Stain & Friends and Middle-earth Enterprises & Friends. Each of the new companies will have a much more focused market strategy. Separating from the huge holding leads to more significant responsibilities, so specific short-term changes in each company might also be expected.

Overall, the deal concludes the result of Embracer’s unprecedented M&A activity. Embracer’s original strategy could not sustain, primarily due to the unwieldy structure of the business, the complexities of managing and expanding all its divisions within the group, and overall shifting market dynamics. However, the recent strategy to split the companies into autonomous entities with distinct goals presents a promising evolution for Embracer as a holding company. Observing how these individual businesses evolve and whether this leads to new M&A deals will be interesting.

We want to thank MGVC, Taylor Wessing, and Xsolla for supporting this digest.

Frame 482023



Sweden-based games publisher Thunderful Group (STO: THUNDR) is divesting Denmark-based games distributor Nordic Game Supply to Handelsselskabet, led by Nordic Game Supply’s acting CEO Henrik Mathiasen, for approximately $6.9m (SEK 76m). The sale price will be based on the inventory book value minus a 28% discount. The deal is happening amid Nordic Game Supply’s financial struggles since 2022, with the company reporting a loss of $59.2m compared to $11.8m in the same quarter a year before.


Thailand-based web3 platform Zentry has raised $140m, led by Binance Labs and with participation from Coinbase VenturesAnimoca BrandsPantera CapitalHashed, and other investors. Previously known as GuildFi, the company will use the investments to develop a universal Superlayer platform that will integrate games across all platforms into one. The rebranding also introduces a token conversion program, allowing GuildFi token holders to convert to the new Zentry token in a 1-for-10 split.

US-based web3 games tech company CARV has raised $10m in a Series A funding round led by Tribe Capital and IOSG VenturesConsensysOKX VenturesFenbushi Capital, No Limit Holdings, Draper DragonArweave, LiquidX, MARBLEX, and other investors participated in the round. The company is developing a modular data layer for gaming. The funds will fuel the development of CARV’s protocol.

US-based web3 gaming company InfiniGods has raised $8m in funding from Pantera Capital to enhance its blockchain mobile games. The investment aims to expand global access and develop its new title, a merge-three game InfiniMerge.

US-based web3 platform Tevaera has raised $5m in funding led by Laser Digital and Nomura Group, with participation from Hashkey CapitalFenbushi CapitalMatter LabsDraper DragonFaculty CapitalCogitent VenturesSelini CapitalDWF LabsMorningstar Ventures, DCF God, Momentum6GBV CapitalMapleblock CapitalGD10 CapitalAquanow, and Coinswitch. The funds will fuel Tevaera’s gaming ecosystem using ZK Stack. The platform will integrate multiplayer games and a gaming marketplace.

Hong Kong-based web3 games developer Puffverse has raised $3m in funding led by Animoca Brands, with participation from Sky MavisArcane GroupSpartan GroupForesight VenturesHashKey CapitalXu Family Office, and other investors. The funding will fuel the development of its title, PuffGo, and a cloud-owned gaming platform for building NFT metaverses.

Hong Kong-based web3 games developer Anichess, part of Animoca Brands (ASX: AB1), has raised $1.8m in funding led by Sfermion and Amber Group, with participation from Fenbushi CapitalAspen DigitalSNZ Capital, and other investors. The funds will advance game development, marketing, and team expansion, leveraging a partnership with to enhance its chess-based gaming platform.

Singapore-based web3 game tech company Uncharted has raised $1.7m in a Seed funding round, led by Shima Capital, with participation from The Spartan GroupDouble Peak GroupDevmons32-bitD64 VenturesTrinity Labs, and LiquidX. The funding will support the development of the studio’s new title, Gangster Arena 2, and further elaborating its GameFi web3 gaming platform.