Embracer Group Acquires Eight Companies for $543m

? Acquisitions

• Swedish video game holding company Embracer Group (SSE: EMBRAC B) announced the acquisition of eight companies for up to $543m* (SEK 4.7B) through its subsidiaries, including:
  • PC&console game development studios Ghost Ship Games, Easy Trigger Games, DigixArt, Slipgate Ironworks, and 3D Realms
  • Mobile gaming studio CrazyLabs
  • VR games developer Force Field
  • In Addition, Embracer Group is expanding its presence in other segments with the acquisition of Grimfrost, a company specialized in producing high-quality Viking merchandise. Embracer acquires 70% of the shares, while the founders remain with 10% ownership each
• The aggregate purchase price of 8 deals is comprised of:
  • $312m upfront, paid 78% in cash and 22% in newly issued Embracer B shares
  • $231m earn-out consideration (50/50 in cash and newly issued Embracer B shares), payable if the acquired companies achieve specific KPIs. For example: to achieve the maximum consideration of a five-year milestone, the companies aggregated Operational EBIT must exceed $115.5m for the FY’26 and achieve certain operational targets. To achieve the maximum consideration the companies aggregated Operational EBIT should exceed $720m plus certain operational targets for FY’29

? Strategic Rationale 

• The acquisitions add more than 500 new employees to Embracer Group, which strengthens the company’s presence in Europe. The acquired companies are expected to contribute $231m-$346m to Embracer’s Net Sales and $40m-$63m to Operational EBIT during the FY’23
• The company continues to expand further into mobile, acquiring CrazyLabs’ vast portfolio of casual and hypercasual games with over 4.6B downloads. As for the PC&console gaming sector, Embracer leverages its development expertise, acquiring Slipgate Ironworks and its associated publishing brand 3D Realms (the creators of the Duke Nukem franchise), long-term partners from Ghost Ship Games (creators of Deep Rock Galactic) and Easy Trigger Games (Huntdown), and Digixart (the studio behind 11-11: Memories Retold). Now there is a potential for developing new entries in the acquired IPs
• These acquisitions are aligned with Embracer’s inorganic growth strategy enabled by its decentralised operating model. Embracer’s operating groups are encouraged to put in place their own M&A agenda in search of organic growth opportunities and better long-term profit

? CrazyLabs

• CrazyLabs is an Israel-based mobile game developer known for its diversified portfolio of casual and hypercasual titles
• Formerly known as TabTale, CrazyLabs was founded in 2010 by Sagi Schliesser, among others. In 2020, CrazyLabs was the 3rd most downloaded mobile game publisher with more than 110 MAU
• Among the most popular CrazyLabs’ titles are Phone Case DIY, Sculpt people, DIY Makeup, Hair Dye, and Acrylic Nails. Currently, the company has two casual titles in development
• CrazyLabs has a team of over 300 FTEs across its offices in Israel, China, Macedonia, Germany, and Ukraine, as well as hyper-casual gaming hubs in India, Turkey, Serbia, and Israel
• After the acquisition, CrazyLabs will operate as an independent group under DECA Games

? Ghost Ship Games

• Denmark-based PC&console game development studio, founded by six industry veterans, including Søren Lundgaard, in 2016.
• In 2018, the studio released its award-winning co-op FPS game Deep Rock Galactic — the game had a peak online of ~36k players on Steam in Feb’21
• Embracer Group had already owned 30% of the company, before the announced deal. Now the Swedish holding will buy the remaining 70% in the company and take 26 of its employees under the wing

? Easy Trigger Games

• Sweden-based PC&console gaming studio was founded by Tommy Gustafsson and Andreas Renbergfounded in 2016. 
• Easy Trigger is best-known for its critically acclaimed arcade shooter Huntdown, created in collaboration with Coffee Stain, a subsidiary of Embracer Group
• The five Easy Trigger’s employees will join Coffee Stain to continue the development of Huntdown IP and create new original indie titles

? Force Field

• Based in the Netherlands, VR development studio Force Field works on games, applications, TV&video content, and interactive experiences 
• Founded in 2015 by Maarten Elshove and Martin de Ronde, the company has worked on such award-winning VR titles as Oculus Studios’ Landfall, Time Stall and Coaster Combat
• Force Field’s 65 employees will work in the independent subsidiary under Vertigo Games

? DigixArt

• France-based PC&console game development studio was founded by Yoan Fanise and Anne-Laure Fanise in 2015
• Since then, the studio has created two award-winning narrative games like Lost in Harmony and 11-11 Memories Retold. Now, DigixArt is creating its new road-trip adventure game Road 96
• DigixArt consists of more than 20 employees and will operate as an independent studio under Koch Media

? Slipgate Ironworks

• Founded by Frederik Schreiber in 2011, Slipgate Ironworks is a Denmark-based PC&console game development studio formerly known as Interceptor
• Known for its development and porting capabilities, the studio has worked on action platformer Ghostrunner (sold to 505 games for  €5m), action RPG Graven (currently in early access), and THQ Nordic’s upcoming AA porting project
• Slipgate, with its team of 100+ employees, will operate as Saber’s subsidiary

? 3D Realms

• PC&console game publisher and developer 3D Realms was originally founded as Apogee in 1987 in the United States by Scott Miller. Now the studio is based in Denmark, led by its CEO Mike Nielsen and Slipgate’s founder Frederik Schreiber
• Consisting of 7 employees and several additional contractors, 3D Realms is a publishing subsidiary to Slipgate Ironworks. ​​The studio has worked on such classic franchises as Duke Nukem, Max Payne, Commander Keen, and Wolfenstein
• After the acquisition, 3D Realms will join Saber Interactive as a subsidiary

? Grimfrost

• Founded in 2014, Sweden-based Grimfrost is a manufacturer, producing high-quality Viking merchandise
• The company has supplied costumes and assets for many TV and movie productions (Game of Thrones, Vikings, Beforeigners), crafted reproductions for museums (Birka, Skara), and created merchandise for bands (Amon Amarth, Wardruna)
• Grimfrost will operate as a subsidiary to Embracer and report under the Partner Publishing and Film division

*Based on SEK 1 = $0.12 exchange rate

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