- Embracer Group stocks plummetted when their major licensing deal failed.
- This loss pressured them into creating a restructuring program.
- The program was very brutal but has fortunately come to an end now.
- The publisher is no longer pursuing acquisitions.
Embracer Group faced significant challenges several months ago when a major $2 billion licensing deal fell through, leading to a sharp decline in their stocks. This pressured the company to prioritize enhancing cash flow and efficiency.
To offset the substantial loss, Embracer Group initiated a restructuring program. However, this move marked the beginning of a challenging period for numerous studios and developers within the Embracer Group umbrella.
Several months later, they announced the conclusion of their restructuring program.
Why it matters: This should lead to more peace of mind for the teams under this publisher as they look ahead to the future.
One of the biggest changes being made is Embracer Group’s shifting focus. The publisher is no longer pursuing mergers as enthusiastically.
I think its too early to start talking about mergers & acquisitions.
-CEO Lars Wingefors
Embracer Group made this announcement during an investor call, coinciding with Take Two’s revelation of acquiring Gearbox, also revealing Borderlands 4 development. They clarified that Gearbox’s restructuring was a part of the program, which has now concluded.
When Embracer Group unveiled its restructuring program, it outlined specific objectives. These goals encompassed reducing financial debt to below SEK 10 billion and reducing overhead costs by at least 10%, along with other measures.
While it remains unclear whether Embracer Group achieved these goals, it’s evident that they likely took a significant step in reducing their losses from the failed licensing deal.
However, this progress came at the expense of studio closures, asset sales, and employee layoffs. Embracer Group had to make the difficult decision to shut down Volition Games and Free Radical.
Moreover, Gearbox and Saber Interactive were sold. Adding to the list, a total of 1,387 workers, or 8% of their total workforce, were also laid off.
Embracer Group also revealed in the investor’s call that multiple companies would like to acquire certain assets within the group every week, but they have been very clear that the company is not for sale.
With this challenging period behind it, Embracer Group now aims to produce the best games possible with its existing studios instead of going out to buy more teams.
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