Embracer Group Has Raised $657m Through The Private Placement
? Private Placement
Sweden-based video game holding company Embracer Group has raised about $657m (SEK 5,782m) through the private placement of newly issued 35.7m B shares
The share issue indicated a strong interest from multiple institutional investors with books being oversubscribed multiple times. E.g. Canada Pension Plan Investment Board (“CPPIB”) has acquired $238.7m worth of series B newly issued shares
The share issue will result in around 8.5% dilution in the number of shares and ~5% dilution of votes’ number
Embracer Group has agreed to not issue additional shares for 90 days following the closure of Private Placement, with some customary exceptions
? Strategic Rationale
With share prices and multiples trading at high range, it is one of the best time to attract money to the market
Embracer Group reinforces financials and allows the company to continue its growth strategy by acquiring new game developers and publishers, among other assets
Embracer Group will most probably announce a series of deals or one “huge” transaction in the next 3-6 months
? Financial Performance
Embracer Group demonstrated an 81% increase in consolidated quarterly net sales compared to Q1 of the previous year reaching $238.5m, as well as strong improvement in EBITDA margin 47% vs 34%
Such impressive financial performance is explained by the strong demand for video games during the COVID-19 pandemic, new releases, and acquisitions
Investments into game development accounted for $52.6m in the accounting period with the total number of ongoing development projects reaching 125, out of which 73 projects are yet to be announced (as of the company’s last report)
? Embracer’s M&A Activity
This September, Embracer Group acquired Dutch-based VR game developer and publisher Vertigo Games for an upfront consideration of $59m and an earn-out consideration of $77m
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, the company 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 Embracer Group 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
? Products
Embracer Group is a multiplatform video game holding company that owns over 190 gaming franchises, including Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdom Come: Deliverance, Insurgency, World War Z and SnowRunner
The company operates globally through its six operative groups: THQ Nordic GmbH, Koch Media GmbH/Deep Silver, Coffee Stain AB, Amplifier Game Invest, Saber Interactive, and DECA Games
The company owns 44 internal game development studios, 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
Embracer Group has its shares publicly listed on Nasdaq First North Growth Market Stockholm under the ticker “EMBRAC B”
SOURCES: EMBRACER, THEGAMINGECONOMY, NEWS.CISION
