Embracer Group – Embracer Group sells Gearbox to Take-Two

In the article on the sale of Saber Interactive, I gave a quick history of the Embracer situation. I will therefore not do it again today and recommend that you refer to this article if necessary. Let's get to the facts: Embracer announced this morning the sale of its subsidiary Gearbox Software has Take-Two Interactive for an amount of 460 million dollars, paid entirely in newly created shares of Take Two.

The transaction in detail

Three studios Gearbox (based in Frisco, Quebec and Montreal) are concerned, as well as the licenses BorderlandsTiny Tina's Wonderland, Homeworld (the next opus of which is expected this year), Risk of Rain, Duke Nukem and Brother in Arms.

Conversely, Embracer retains the other studios and licenses of its current subsidiary, namely Gearbox Publishing San Francisco (originally known as Perfect World Entertainment ; the structure will change its name again), Cryptic Studios (acquired in 2021), Lost Boys Interactive and Captured Dimensions. The last two names probably mean nothing to you, Lost Boys Interactive is a studio that has collaborated on numerous games (including… Borderlands and Tiny Tina's Wonderland), while Captured Dimensions is based in Frisco (yes, like the main studio from Gearbox) and specializes in 3D capture, used for many films (including Black Panther, Avatar 2 4 or even Justice League) and in a few games, including, once again, the games from Gearbox Software.

Embracer also retains the licenses attached to Perfect World and Cryptothat is to say Remnant, the future Hyper Light Breaker, the MMOs Neverwinter Online and Star Trek Online as well as unannounced games.

To conclude this part, let us point out that the choice of Take-Two Interactive as buyer is logical. Indeed, the American company was the publisher of Borderlands and Tiny Tina's Wonderland, which made most of Gearbox's success. Take-Two thus obtains the developer of its games at a lower cost, plus some bonus licenses.

The right price ?

“At a lower cost”, because that is what you will probably read almost everywhere: originally, Embracer had negotiated a $1.38 billion deal for the takeover of Gearbox, while the studio is sold today for 460 million. As Perfect World, Cryptic Studios, Lost Boys Interactive and Captured Dimensions were later acquired by Embracer, the comparison seems very simple here, much more so than with Saber Interactive two weeks ago. However, she is not that much.

Indeed, the figure of 1.38 billion announced during the acquisition of Gearbox in 2021 included potential bonuses. To be precise, the Texan studio was bought for 363 million, plus a little over a billion that could be acquired in bonuses depending on the studio's performance over a six-year period. It is impossible to know how much of these bonuses were paid. This information is essential, but it seems obvious, even without knowing it, that Embracer lost money between its purchase of Gearbox in February 2021 and the sale to Take-Two today; this data could simply make it possible to know the extent of the loss.

Let's now change perspective and look at the summary table provided by Embracer, as during the sale of Saber Interactive:

Looking at it, this time we have the impression that Embracer got a good deal. They are in fact getting rid of, it seems, less than half of their subsidiary's turnover and, above all, a loss-making part of it. However, it is essential to be aware that this table only concerns the year 2023.

Indeed, 2023 was the release year of Remnant II, tested in our columns, which was a great success. Gearbox, on the other hand, hasn't had a major release: Borderlands 3 dates from 2019, Tiny Tina's Wonderland from 2022. The main contributor to its turnover is probably Risk of Rain Returns, released in November 2023. The game has had notable success, but clearly has less scope than the AAA of the studio.

Down periods are a normal part of a AAA development studio. It is not because Gearbox did not generate profits in 2023 that the Texan structure did not do so between 2021 and 2024 (including the release of Tiny Tina's Wonderland), nor that it would not have. not done in the future. However, again, these are figures that we do not know; we can simply point out that the presentation of Embracer is, once again, a little misleading.

And after ?

Two weeks ago, I indicated that rumors were already mentioning the sale of Gearbox. This has now been completed… and I don't have any new rumors at hand. I can therefore only repeat my conclusion from two weeks ago: I hope for Embracer that this marks the end of its slimming treatment and that the future looks brighter for the Swedish group.