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Embracer Group Has Acquired Vertigo Games For Up To $136m

WRITTEN BY | 19 Sep 2020
Embracer Group Has Acquired Vertigo Games For Up To $136m

💵 Acquisition

  • Sweden-based PC and console games developer and publisher Embracer Group (STO: EMBRAC B) has acquired 100% of Dutch-based VR game developer and publisher Vertigo Games through its wholly-owned subsidiary Koch Media

  • The total purchase price of ~$136m (€115m) consists of:

    • $59m (€50m) of the upfront equity purchase price, with 80% paid in cash and 20% in shares. The upfront consideration is subject to lock-up, 50% — 12 months, 50% — 24 months

    • $77m (€65m) of a maximum earn-out consideration with 62% paid in cash and 38% in shares

  • The transaction does not require any additional approval and was completed on September 16, 2020

  • Vertigo Games will continue running independently within Koch Media, using Embracer Group expertise and resources to continue the expansion into the VR market

  • Vertigo Games’ upfront enterprise value adjusted for net cash of ~$6m is equal to $53m (€45m)

Multiples w/o Earn-out with Earn-out
EV/Rev’20E 3.8x – 4.5x 9.2x – 11.0x
EV/EBIT’20E 5.6x – 7.5x 13.8x – 18.3x

🧩 Strategic Rationale

  • Leveraging Embracer’s IP catalog for the development of VR games

  • Granting financial stability to Vertigo publishing unit to accelerate investments and take a strong position in the emerging VR market

💵 Financial performance of Vertigo Games

In €m Jan 2020-Dec 2020 Apr 2021-Mar 2022
Net sales 10-12 18.24
Operational EBIT 6-8 11-17


Earn-out consideration
EBIT (1 Jul 2020-31 Mar 2026) Cash Shares Total
≥100 15 10 25
≥95 12.5 10 22.5
≥90 10 10 20
≥85 7.5 10 17.5

🎲 Products

  • Vertigo Games operates via three main business areas including Development, Publishing, and Arcades

  • Flagship product — Arizona Sunshine, #4 most sold VR game in the last two years and #1 arcade VR title, with over 1 million copies sold worldwide on all major VR platforms

    • Vertigo Studios, the game development team, has so far released 4 games (World of Diving, Arizona Sunshine, Skyworld, Skyworld: Kingdom Brawl) and 2 DLCs (Arizona Sunshine: Dead Man and Arizona Sunshine: The Damned), with the studio’s latest and largest project – After the Fall – in the pipeline and due to be released this year

    • Vertigo Publishing, the publishing team that released all of Vertigo’s games as well as third-party titles, such as A Fisherman Tale, Traffic Jams, Path Craft, and Unplugged: Air Guitar. The team offers third-party developers funding, technical and marketing support, in hopes to become the leader in VR publishing as the VR market continues to grow and has already sold 1.5 million units in total

    • Vertigo Arcades, the arcade distribution team, that spreads Vertigo and third-party VR games to VR arcade operators. It’s already available in 700+ locations in over 40 countries around the world. It’s accountable for 1/4 of all playtime in Western VR arcades, with 15-20 titles per arcade and its own proprietary platform Haze VR

💸 Embracer’s M&A Activity

  • This August, 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

  • The company remains very active in executing new M&As raising about $185m equity capital in April 2020 and having over $585m+ in cash and unutilized credit facility in the balance sheet (as of 30 June 2020)

  • Embracer Group prefers the decentralized M&A strategy, where the founders keep their own identity and get access to all benefits of Embracer’s ecosystem

  • Embracer Group owns 44 internal game development studio, including Vertigo Games, and is a publisher for 55 external studious, engaging more than 4,000 employees and contracted employers in more than 40 countries


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💵 Acquisition Sweden-based PC and console games developer and publisher Embracer Group (STO: EMBRAC B) has acquired 100% of ...
Vertigo Games
  • Established in 2008

  • Headquarters – Rotterdam, The Netherlands

  • Team of 50 employees, 35 of which are developers

  • Founded by Richard Stitselaar and Vincent van Brummen

  • VR game developer and publisher (since 2013)

  • Deal presentation

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