General Gaming Take-Two acquires Gearbox from Embracer for $460 million in stock

[Commissar SFLUFAN]

Embracer Group divests Gearbox Entertainment for a consideration of USD 460 million to Take-Two Interactive Software, Inc. - Embracer Group

EMBRACER.COM

---

INSIDE INFORMATION: Embracer Group has today entered into an agreement to divest Gearbox Entertainment, for a consideration of USD 460 million (SEK 4.9 billion) to Take-Two Interactive Software, Inc. (“Take-Two”). The proceeds from the deal will, upon closing, significantly reduce net debt, earnout obligations and capex. Embracer retains selected companies, including Gearbox Publishing San Francisco […]

 

Quote

INSIDE INFORMATION: Embracer Group has today entered into an agreement to divest Gearbox Entertainment, for a consideration of USD 460 million (SEK 4.9 billion) to Take-Two Interactive Software, Inc. (“Take-Two”). The proceeds from the deal will, upon closing, significantly reduce net debt, earnout obligations and capex. Embracer retains selected companies, including Gearbox Publishing San Francisco (to be renamed), with the publishing rights to the Remnant franchise, the upcoming Hyper Light Breaker and other notable unannounced game releases.

 

“Today’s announcement marks the result of the final structured divestment process and is an important step in transforming Embracer into the future with notably lower net debt and improved free cash flow. Through the transaction, we lower business risk and improve profitability as we transition to becoming a leaner and more focused company. After evaluating several options for Gearbox, I am happy that we have reached a solution that is in the best interest of all stakeholders. Randy and the team have been great team members throughout the past years, and I would like to thank them all for that. As one of the world’s greatest games developers, I am confident that Gearbox will continue to innovate and thrive in their new home within Take-Two,” says Lars Wingefors, co-founder and CEO of Embracer.

 

”As a significant long-term Embracer Group shareholder, I believe in the strategy for the Embracer Group going forward and am completely convinced that this transaction is the best possible scenario and an obvious net positive arrangement for Embracer Group, for Take-Two and, of course, for Gearbox Entertainment. My primary interest is always Gearbox, especially our talent and our customers. I want to personally assure fans of our games that this arrangement will ensure that the experiences we have in development at Gearbox will be the best they can possibly be,” says Randy Pitchford, founder and CEO of Gearbox Entertainment.

 

 

Quote

Transaction key components

 

• The purchase price on a cash and debt free basis and assuming a normalized level of working capital amounts to USD 460 million (SEK 4.9 billion) and will be subject to adjustments by customary purchase price mechanics.
• The consideration at closing will be paid 100% in newly issued Take-Two shares. The number of Take-Two shares will be calculated by dividing the purchase price by the volume weighted average closing price per share on the Nasdaq Global Select Market during the five trading day period ending on the trading day immediately prior to the closing date. Embracer’s intent is to sell these shares to receive cash proceeds soon after closing. Closing is expected in Q1 FY 24/25, ending June 2024.
• Following purchase price adjustments, transaction costs, share sell-down and earnout settlements (including earnouts earned and due to be previously paid in Q1 FY 24/25) the expected net cash proceeds amount to approximately USD 300-330 million (SEK 3.2-3.5 billion).
• Cash earnouts in accordance with non-GAAP will be reduced by SEK 1.6 billion compared to the group total of SEK 6.3 billion as of Q3 FY 2023/24 and of a total maximum of approximately 30 million B shares in share earnout obligations approximately 18 million B shares will be reduced. In connection with closing, the remaining approximately 12 million B shares will still be issued as settlement of certain earnout obligations.
• The divested assets include:
  • Gearbox Software (Frisco, Texas)
  • Gearbox Montréal
  • Gearbox Studio Quebec
  • Borderlands and Tiny Tina’s Wonderlands franchises, as well as Homeworld, Risk of Rain, Brothers in Arms and Duke Nukem
• The retained assets include:
  • Gearbox Publishing San Francisco (to be renamed prior to closing, formerly named Perfect World Entertainment), including the publishing rights to the Remnant franchise, the upcoming Hyper Light Breaker and other notable unannounced game releases
  • Cryptic Studios, including MMO titles Neverwinter Online and Star Trek Online.
  • Lost Boys Interactive
  • Captured Dimensions
• The retained companies will be welcomed and integrated into other parts of Embracer Group in the coming period. All companies are expected to contribute with a positive cash flow going forward.

 

[Spawn_of_Apathy]

Im a little confused on the process here. So is the divested assets what Take-Two is getting and the retained assets what Embracer is keeping? 

[SuperSpreader]

11 minutes ago, Spawn_of_Apathy said:

Im a little confused on the process here. So is the divested assets what Take-Two is getting and the retained assets what Embracer is keeping? 

 

My guess is ttwo didn't want those, which is a real bad sign for them. I'd also be worried if I was a ttwo employee in a less than performing studio right now. 

[AshsToAshs]

Makes sense that "Gearbox SF" wasn't included in the deal, considering that it was previously Perfect World which was bought by Embracer and then it seemed like Embracer forced it to be rebranded (I feel like they were trying to do something like Zenimax/Bethesda with this). 

 

I would be worried if I was at Gearbox SF, as I'm not familiar with too many recent successes from them.

 

Also very happy to see that Gearbox Frisco wasn't shuttered like so many other Embracer owned studios. Makes sense that Take2 would grab them, considering they have produced so much together previously.

[SuperSpreader]

Layoffs at Gearbox 

[DPCyric]

So they kept the best stuff and jettisoned the rest 

[Remarkableriots]

R.I.P. Gearbox 

[Littleronin]

21 minutes ago, Remarkableriots said:

R.I.P. Gearbox 

Can we R.I.P. what was basically a zombie?

[Commissar SFLUFAN]

21 hours ago, SuperSpreader said:

Layoffs at Gearbox 

 

Gearbox Layoffs Hit Staff Hours After Being Sold By Embracer - Insider Gaming

INSIDER-GAMING.COM

---

Just hours after being sold by Embracer Group to Take-Two Interactive, layoffs have hit the staff at Gearbox Entertainment.

 

Quote

 

It took less than a day for employees at Gearbox Entertainment to be hit with layoffs after being sold by Embracer Group.

 

According to multiple posts on social media, a number of people are no longer working for Gearbox after it was announced that the company is being purchased by Take-Two Interactive.

 

“Along with countless others, I’ve just been informed I’ve been laid off at Gearbox,” former PR manager Jennifer Locke posted on Twitter. “It really was a dream come true working on this team, and I’m incredibly grateful for my time here.”

 

Senior User Research Investigator also posted on the platform saying, “I just lost my job.”

 

“Following the exciting news of the Take-Two Interactive & Gearbox Entertainment merger last night, I, like many others, received the unfortunate news this morning that my position will no longer be required,” former director of online engagement Chris Harada posted on LinkedIn.

 

“After three incredible years at Gearbox, my journey with the company has concluded.”

 

Another former PR staff member, Steve Prince, also confirmed on LinkedIn that he was among the cuts.

 

As of writing, it’s unclear how many people were impacted by the layoffs