Historically, entrepreneurs have always gambled with Mergers & Acquisitions (M&A), hoping the deal leads to enormous gains on different aspects. While a lot of M&As happen regularly, a few high-value mergers either, globally or domestically, always attract attention as they have interesting implications for business development.
According to the report, Global mergers and acquisitions (M&A) activity hit an all-time high in the first six months of 2021, with deals worth more than $2.6T (approx €2.2T), up from $926B (approx €781B) YoY and surging past the pre-pandemic five-year average (H1 2015-2019) of $1.6T (approx €1.35T).
Further, Europe recorded $412B (approx €347B), up from $245B (approx €206B) in H1 2020 and exceeding the H1 2015-2019 average of $356B (approx €308B).
Announced eight acquisitions
In this regard, Embracer Group AB, a relatively unknown company from Karlstad, Sweden, has announced eight acquisition agreements. According to the company, the aggregated day one purchase price for the transactions amounts to approximately SEK 2.7B (nearly €260M) in total, on a cash and debt free basis. Approximately SEK 2.1B (approx €210M) is paid in cash and SEK 0.6B (nearly €59M) is paid in newly issued Embracer B shares.
Previously, the Swedish company has acquired 27 companies in the past 12 months, making it Europe’s most valuable video-game developer.
Notably, Embracer Group AB has surpassed UK business services provider Marlowe Plc (12 transactions) and Swedish investment firm Lifco AB (16 transactions), in terms of the pace of acquisitions, according to Bloomberg.
According to the company, the acquired businesses are expected to contribute to Embracer’s net sales in the range of SEK 2,000-3,000M (approx €196-294M) and to Operational EBIT in the range of SEK 350-550M (approx €34-53M) during the next financial year, ending March 31, 2023.
What you need to know about Embracer Group AB?
Founded by Lars Wingefors in 1999, Embracer Group is the parent company of businesses developing and publishing PC, console, and mobile games for the global games market.
It is worth mentioning that Lars Wingefors, in his teenage years, started his business by selling comics by mail order before diving into the video games industry.
The Group has a wide range catalogue of over 240 owned franchises like Saints Row, Goat Simulator, Dead Island, Darksider, and amongst many others. Furthermore, it has 77 internal game development studios as well. Through the transactions, Embracer has grown to more than 8000 employees and contracted employees, in more than 40 countries.
Headquartered in Karlstad, Sweden, Embracer Group has a global presence through its eight operative groups — THQ Nordic GmbH, Koch Media GmbH/Deep Silver, Coffee Stain AB, Amplifier Game Invest, Saber Interactive, DECA Games, Gearbox Entertainment, and Easybrain.
In 2016, Embracer Group went public on Nasdaq First North Growth Market Stockholm under the ticker EMBRAC B. Since then, the value of shares has multiplied 30x overtaking French rival Ubisoft Entertainment SA this year to reach a market value of $13B, according to Bloomberg.
Why this acquisition?
As stated by the company, the transactions improve the group’s capabilities within mobile publishing and development, indie development, VR development, retro shooter, and other development for PC/consoles.
With the acquisition, the company’s IP portfolio is strengthened with titles like Deep Rock Galactic for PC/console and Super Stylist for mobile.
“The announced Transactions are aligned with Embracer’s growth strategy and are enabled by the group’s decentralised operating model. Over the past four years, Embracer has expanded from one to eight operating groups. Each of these operating groups has put in place its own M&A agenda to add additional organic growth opportunities and improve long-term profit and cash flow generation. For Embracer’s decentralised operating model to be sustainable and scalable, it is a necessity that most acquisitions originate and onboarded on the operating group level,” says the company in a press release.
Embracer is also adding capabilities to address adjacent growth opportunities with the acquisition of B2C e-commerce and merchandise company Grimfrost with a focus on Viking merchandise on a global scale.
“I am excited to welcome more than 500 great talents across a wide range of well-established businesses that further diversify and strengthen the group across the world from day one. Brick by brick we continue to improve our operating groups and consequently Embracer as a whole. We still have a strong balance sheet with a sizable net cash position to support further M&A going forward. We continue to have many ongoing discussions with entrepreneurs, creators, and companies to join the family, including large or transformative companies that would create new operating groups. I’m looking forward to continuing growing the Embracer Group both organically and in-organically in the decades to come.” says Lars Wingefors, co-founder and Group CEO of Embracer.
Now, let’s take a brief look at the list of companies that Embracer Group AB has acquired most recently
CrazyLabs
Embracer Group has acquired 100 per cent of the shares in Israeli company CrazyLabs. Based out of Tel Aviv, CrazyLabs is a publisher and developer of hit mobile game Super Stylist and long-lasting casual and lifestyle role-playing games.
Notably, the company was the 3rd most downloaded publisher in all mobile games in 2020, with over 4.5 billion downloads to date and over 110 million monthly active users.
Reason: CrazyLabs will improve Embracer’s publishing capabilities within mobile, add scale and create additional M&A opportunities.
“In these exhilarating times for mobile games, we are extremely happy to join forces with the whole Embracer family and the DECA Group in particular. We are confident that this is a jump forward for CrazyLabs on our journey of becoming the top publisher and developer of casual and hyper-casual games and anticipate in excitement what’s yet to come!” says Sagi Schliesser, CEO CrazyLabs Ltd.
Ghost Ship Games
Embracer Group AB, through its wholly-owned subsidiary Coffee Stain Holding AB, has acquired Danish company Ghost Ship Games. Based in Copenhagen, Ghost Ship Games is a development studio founded by six industry veterans in 2016.
Notably, the studio has 26 employees that have worked with Coffee Stain on the development of the critically acclaimed co-op FPS game Deep Rock Galactic.
The company is led by co-founder and CEO Søren Lundgaard and co-founder and Creative Director Mikkel Martin Pedersen, who will remain in their current roles post-transaction. It’s worth mentioning that Ghost Ship Games will remain autonomous.
Reason: With Ghost Ship Games’ experienced team and proven capabilities, Coffee Stain aims to create excellent indie IP.
“Being invited into Embracer, one of the most visionary players in the global game market is a truly fantastic opportunity for us. It feels crazy to think that it’s only been five years since we founded Ghost Ship Games, and now we’ve become part of this big family of very clever game developers and publishers. With the backing of Embracer, we can more boldly create new IPs, continue our ventures in game-studio investments, and expand the Deep Rock Galactic IP to more markets. Merging with Embracer is by no means an exit for us – it’s a natural continuation of our journey towards even greater achievements.” says Søren Lundgaard, Co-founder and CEO of Ghost Ship Games.
Force Field
Embracer Group AB has acquired 100 per cent of the shares in Force Field through its operative group Koch Media and wholly-owned subsidiary Vertigo Games. Based out of Amsterdam, Force Field is a VR development studio with a portfolio of multiple award-winning VR titles, including Oculus Studios’ titles “Landfall”, “Time Stall”, and “Coaster Combat”.
Founded in 2015, the company has also developed VR experiences such as National Geographic Explore and Anne Frank’s House in VR. Force Field is led by co-founder and CEO Arthur Houtman and Creative Director Martin de Ronde, that will remain in their current roles. Also, Force Field will operate as an independent subsidiary to Vertigo Games.
Reason: With Force Field acquisition, Vertigo Games aims to increase 1st party AAA VR development capabilities to fuel rapid growth in the VR market.
Easy Trigger
Through wholly-owned subsidiary Coffee Stain, Embracer Group has acquired 100 per cent of the shares in Easy Trigger. Founded in 2016, Easy Trigger is the studio behind the critically acclaimed title Huntdown.
Headquartered in Trollhättan, Sweden, the company is led by co-founder and CEO Tommy Gustafsson, and co-founder and lead programmer Andreas Renberg. Notably, they will remain in their current roles post-transaction.
Reason: Through the acquisition, Coffee Stain will boost the development of 1st party IP within the group. Further, the company will collaborate with Easy Trigger to continue working on the Huntdown IP as well as creating new original indie titles.
“We look forward to continuing our partnership with Coffee Stain and further leverage the knowledge and experience within the entire Embracer Group, to accelerate growth within Easy Trigger and continue to make great games,” says Tommy Gustafsson, Co-founder, and CEO of Easy Trigger.
Digixart
Koch Media GmbH, a wholly-owned subsidiary of Embracer Group AB has acquired 100 per cent of the shares in the France-based DigixArt. Notably, DigixArt will continue to operate as an independent studio under Koch Media.
Founded by Yoan Fanise and Anne-Laure Fanise, DigixArt is a profitable games development studio with 20+ employees. The company has developed “Lost in Harmony”, “11-11 Memories Retold” and the upcoming title “Road 96”.
Reason: Through the acquisition, Embracer strengthens its position in the growing sector of narrative games. Going forward, the team will continue to focus on the development of new IPs and with support from Koch Media and Embrace.
“By joining forces with Koch Media and Embracer, we will be able to grow our team and continue to focus on creating innovative and great games. We are truly excited about this partnership and what it holds for the future of DigixArt”, says Anne Laure Fanise, Co-founder DigixArt.
Slipgate Ironworks
Saber Interactive, a wholly-owned subsidiary of Embracer Group AB, has acquired 100 per cent of the shares of Slipgate Ironworks.
Based in Aalborg, Denmark, Slipgate was founded in 2017 by Frederik Schreiber and Kent Christoffersen. The team has proven capable of high-quality new game development, third-party titles, and porting projects across various genres and for PC and console, and with a particular passion for retro shooters.
The company has a history of collaborating with companies within the Embracer Group, primarily Saber and THQ Nordic. Slipgate has been involved in the development and porting includes Ghostrunner, the original IP GRAVEN and an upcoming AA porting project from THQ Nordic.
Reason: Through the acquisition, Embracer onboards a strong team with proven expertise in development, co-development, and porting.
“We’ve established a great foundation at Slipgate, and have worked with Saber on several projects. We quickly found a great synergy and shared a common vision for the quality of games we want to deliver. With this acquisition, we’ll be able to expand our activities at both Slipgate and 3D Realms, with a strong and dedicated partner. We couldn’t imagine a better match!” says Frederik Schreiber, CEO Slipgate Ironworks.
3D Realms
Saber Interactive has also acquired 100 per cent of the shares in 3D Realms (previously Apogee Software). Based in Aalborg, Denmark, 3D Realms is a game publisher with 30+ years of heritage in the industry and the creators of the cult game series Duke Nukem.
The Danish company has published six new game titles in collaboration with respected independent developers for both PC and console. The studio has a current pipeline of six new game titles and several exciting projects in collaboration with Slipgate Ironworks.
It’s worth mentioning that the Danish company SDN Invest acquired 3D Realms in 2014, and since then, 3D Realms has been led by CEO Mike Nielsen and VP Frederik Schreiber. However, as part of the acquisition, CEO Mike Nielsen will step down, and Frederik Schreiber will assume the role of CEO. Mike Nielsen will remain attached as an advisor.
Reason: Through the acquisition, Saber onboards a connected, experienced publisher with a long background in games development.
“We are extremely honoured to join the Embracer and Saber family. I know that under their guidance, 3D Realms will continue to grow on the path we have set out. I am very proud to have been a part of 3D Realms, and I’m happy to pass on the torch to Frederik Schreiber, who has run the company and built it to what it is today”, says Mike Nielsen, Co-founder and ex-CEO of 3D Realms.
Grimfrost
Embracer Group AB has agreed with the owners of Varyag Group AB (doing business as Grimfrost) to acquire 70 per cent of Varyag Group AB.
Founded in 2014, Grimfrost is an e-commerce specialist and a leading player with a global brand within high-quality Viking merchandise. Based in Karlstad, the company’s primary business model is B2C, but it also supplies costumes and assets for TV and movie productions (e.g. Game of Thrones, Vikings) and reproductions for museums (B2B).
Reason: Through the acquisition, Embracer onboards an experienced team that will provide Embracer with significant knowledge within global B2C e-commerce. Moreover, Embracer will help Grimfrost to capitalise on current potential and unmet demand.
Previous acquisitions
Previously, the company has acquired various companies, including A Thinking Ape Entertainment, Snapshot Games, Nimble Giant Entertainment, Mad Head Games, 34BigThings, Zen Studios, Sandbox Strategies LLC, IUGO Mobile Entertainment, Purple Lamp Studios, and more.
