Switzerland-based mobile gaming company Miniclip has acquired Cyprus-based mobile games developer Easybrain from Sweden-based gaming giant Embracer Group (STO: EMBRAC B) for $1.2B. The deal is expected to close in early 2025.
Financial Details: No More Shares
In Apr’21, Easybrain was acquired by Embracer for $765m, with a $640m upfront payment and a potential $125m earn-out, all paid entirely in Embracer shares. Since then, Embracer’s share price has plummeted to nearly a quarter of its Apr’21 value.
This time, Easybrain is being acquired by Miniclip in an all-cash transaction with no shares involved.
Regarding the financial performance, Embracer Group expects Easybrain to reach Revenue of $287m and adj. EBITDAC of $116m in FY24/25. Considering this and the past year’s performance, the deal represents the following multiples:
| FY23/24 | YTD FY24/25 | |
| Enterprise Value (\$m) | 1,172 | 1,172 |
| EV/Revenue | 4.1x | 3.8x |
| EV/adj. EBITDAC | 10.1x | 9.3x |
Let’s examine why the deal is possible from both the buyer’s and the seller’s perspectives to analyze its feasibility.
Buyer’s Side: Product Fit and Monetization Potential
Founded in 2016, Easybrain is a 340-person studio creating mobile puzzle games. Today, the studio operates 24 games, the best known being Pixel Art—Color by Number, Art Puzzle—Jigsaw Art Games, Drum Pad Machine—Beat Maker, and Jigsaw Puzzles—Puzzle Games.
Together, the company’s games have generated over 1.7 billion downloads, according to AppMagic.
Apart from casual puzzle titles, the company’s portfolio includes many traditional puzzle games, including Sudoku, Crosswords, and various number puzzles. This diversifies the portfolio and expands the company’s audience. Plus, it makes an exciting fit for the acquirer’s portfolio.
On the one hand, Miniclip has a vast portfolio of traditional sports games, including pool, football, golf, and cricket. This gives both Miniclip and Easybrain a shared experience in scaling and monetizing more “traditional” games, which heavily rely on downloads and ad monetization.
Similar monetization allows the company to double down on ad monetization and optimize UA, which is one of the major reasons for this deal.
On the other hand, puzzle games still have different audiences and nuances when operating them. Acquiring a new company with a proven track record and a diverse portfolio is one of the most effective ways to enter new niches in the current market.
But how did this deal even become possible? It’s all coming back to Embracer.
Seller’s Side: Reinventing Embracer Group and Covering Debt
Sweden-based gaming company Embracer Group has been one of the industry’s most active acquirers since 2020, completing 73 deals with a total value of $8.2B including earn-outs. Let’s have a brief retrospective for better context.
— From 2020 to 2022, Embracer Group was the most active acquirer in the gaming industry. Its aggressive M&A strategy led to the company’s growth to twelve huge operating groups managing hundreds of projects simultaneously.
— 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 gaming companies.
— In Apr’24, the company finished the restructuring, announcing a split into three separate entities: Asmodee Group, Coffee Stain & Friends, and Middle-earth Enterprises & Friends. The split-up is expected to be fully finished by the end of 2024.
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Apart from global macroeconomic shifts, Embracer’s decline is primarily caused by its overly complex structure, which brought significant management and operational challenges. As a result, Embracer has been selling off assets recently to simplify and streamline its organization. Some of the recent sales are shown in the picture.
Conclusion
The deal is part of Embracer Group’s ongoing effort to reinvent itself by parting with some of its major assets. This approach helps maintain a more manageable organizational structure and allows Embracer to capitalize on synergies from having a more focused strategy.
Most importantly, these deals also enable Embracer to address its financial issues and cover its large debts. In this context, the sale of Easybrain significantly reduces Embracer’s debt, a critical move that cannot be underestimated.
However, this restructuring benefits the group as well as the divested companies. With Miniclip as the new parent company, Easybrain can access more dedicated resources, enhancing its development while doubling down on monetization and user acquisition strategies that align with Miniclip’s expertise and portfolio.
