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Embracer Group Acquires Gearbox, Easybrain And Aspyr For Up To $2.6B

WRITTEN BY | 09 Feb 2021
Embracer Group Acquires Gearbox, Easybrain And Aspyr For Up To $2.6B
18 NOV 2020
Embracer Group – 13 Acquisitions For $441.5m
8 OCT 2020
Embracer Group Has Raised $657m Through The Private Placement
16 SEP 2020
Embracer Group Has Acquired Vertigo Games For Up To $136m

💵 Three Acquisitions

  • Embracer Group (SSE: EMBRAC B) acquires Gearbox Entertainment, Easybrain, and Aspyr Media for a total consideration of ~$2.6B. With the acquisitions, Embracer expands to the 7th and 8th operating groups and scales its development, publishing, and porting capabilities across various platforms

💵 Gearbox Entertainment

  • Embracer has entered into an agreement to acquire a US-based PC & console AAA game developer The Gearbox Entertainment Company for up to $1.3B, including:

    • $363m upfront (~48% in newly issued shares with 12/24 months lock-up period)

    • $300m operational earn-out (50% in shares) subject to the completion of certain projects and key employees staying employed by Gearbox during the next 6 years

    • up to $390m financial earn-out 1 (~54% in shares), payable only if accumulated adj. EBITDA > $335m over the next 4 years after the transaction (average $84m adj. EBITDA per year)

    • up to $325m financial earn-out 2 (100% in cash), payable only if accumulated adj. EBITDA > $702m over the next 6 years after the transaction (average $117m adj. EBITDA per year)

  • Gearbox generated approximately $123m in Net Sales and $50m in adj. operational EBIT over the Jan-Sep’20 period. Considering annualized financials ($165m Net Sales, ~$65m adj. EBIT) the valuation multiples account for upfront/adj.EBIT 5.6x, upfront+operat.earn-out/adj.EBIT 10.2x, and total.consideration/adj.EBIT 21.2x

  • Founded in 1999, Gearbox performs development and work-for-hire activities under Gearbox Software as well as publishes games with Gearbox Publishing division:

    • As a developer, it is primarily known for its flagship product — the FPS Borderlands series. Gearbox Software has also worked on such huge IPs as Half-Life, Brother in Arms, Duke Nukem, and Halo

    • As a for Gearbox Publishing, it stands behind such games as Homeworld series, Risk of rain 2, We happy few, and Godfall

  • Adding Gearbox as the 7th independent operating group, Embracer gets an M&A platform for further inorganic growth in North America and instant access to $1B+ critical success franchise Borderlands further expanding its premium product portfolio

Source: press release and presentation

Borderlans game.jpg

💵 Easybrain

  • Embracer has entered into a merger agreement with Cyprus-based mobile games developer Easybrain for up to $765m. The total consideration is paid 100% in newly issued shares and includes:

    • $640m upfront paid in four installments: $130m available at closing, $220m with six-months lock-up, $145m after one-year lock-up, and $145m after two-year lock-up (payable if sellers are employed)

    • up to $125m earn-out, payable in two installments:

      • the first tranche paid if accumulated EBIT $189m over Mar’21—Mar’24

      • the second tranche paid if the accumulated EBIT > $219m over Apr’24—Mar’27

  • Based on Easybrain financials in 2020 ($210m Revenue, $70m EBIT), the valuation multiples are 9.1x upfront/EBIT and 10.9x total EV/EBIT

  • Founded in 2016, Easybrain has a diverse portfolio of the various puzzle and logic mobile games, including Pixel Art: Color by Number, Drum Pad Machine, Killer Sudoku, and many other titles

  • Making Easybrain its 8th operative group, Embracer continues increasing exposure to the mobile space following the recently announced acquisitions of Deca (~$100m), A Thinking Ape (~$105m), and IUGO Games. We should probably expect more deals in the mobile space by Embracer

Source: press release and presentation


💵 Aspyr Media

  • Embracer Group, through its subsidiary Saber Interactive, has entered into an agreement to acquire US-based publisher and developer Aspyr Media for a total consideration of $450m, including:

    • $100m upfront, paid 60% in cash and 40% in newly issued shares

    • $25m operational earn-out, paid 50% in cash if the founders remain employed and a new commercial product is released every year over the next 5 years

    • up to $325m financial earn-out, payable 50% in cash and if the accumulated EBIT is at least higher than $70m over the next 7 years (to receive maximum earn-out accumulated EBIT > $961m)

  • Considering Aspyr’s financial results for 2020 ($40.6m Revenue, $11.4m operational EBIT), the transaction multiples are 8.8x upfront EV/EBIT and 39.5x total EV/EBIT

  • Founded in 1996, Aspyr Media is a video game publisher and developer, best known for its porting capabilities. The company has worked with 11 out of the 15 biggest game publishers

  • Among many other games, Aspyr has ported Civilization V and VI, Star Wars KOTOR, Borderlands 2, and Sim City 4. Aspyr Media’s porting and cross-platform IP expertise will be a great add-on to the existing family of 137 studios

Source: press release and presentation

Aspyr products.jpg

💸 Previous Acquisitions

  • In November 2020, Embracer announced 13 acquisitions including 2 mobile-focused studios, 9 PC/Console studios, 1 QA provider, and 1 PR agency for the total purchase price of up to $441.5m.

  • In September 2020, Embracer Group acquired Vertigo Games for up to $136m, including $59m of an upfront consideration and $77m of a maximum earn-out consideration

  • In August 2020, Embracer Group announced 8 acquisitions: Sola Media, Pow Wow Entertainment, Palindrome Interactive, Rare Earth games, Vermila Studios, Deca Games, New World Interactive, and 4A Games

  • In February 2020, Embracer Group acquired PC and console game developer Saber Interactive for $150m of upfront consideration with an additional earn-out of $375m

  • Among the previous acquisitions of the company are Tarsier Studios, Milestone s.r.l., Goodbye Kansas Game Invest, Gunfire Games, Piranha Bytes, Warhorse Studios, 18POINT2, Coffee Stain, Bugbear Entertainment, and Koch Media


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💵 Three Acquisitions Embracer Group (SSE: EMBRAC B) acquires Gearbox Entertainment, Easybrain, and Aspyr Media for a total ...
Embracer Group
  • Established in 2008

  • Headquarters — Karlstad, Sweden

  • Founded by — Lars Wingefors, Pelle Lundborg, and Nik Blower

  • Video game holding company

  • Embracer Group owns 77 internal game studios with more than 8,000 employees and contracted employees in more than 45 countries

  • Financial interim report October-December 2020