Embracer is going away, to be replaced by three different companies, but it’s not due to the backlash, CEO says.
By Eddie Makuch on April 24, 2024 at 1:08PM PDT
Video game giant Embracer won’t have that name for much longer. As part of the company’s recent announcement that it’s splitting into three distinct companies, the Swedish giant also confirmed that the name Embracer is going away.
Current Embracer CEO Lars Wingefors told GI.biz that he will create a new holding company for which he will serve as the majority shareholder for all three companies. The name of this overarching company has not been confirmed yet, however, nor do we know when the name Embracer might go away for good.
Wingefors refuted the idea that he is abandoning the Embracer name in order to distance both himself and the company from the controversy that has ensued following its decision to eliminate 1,400 jobs, cancel over two dozen games, and close down several studios.
“This isn’t the case at all. These changes in names are strategic moves designed to let every new entity build their own distinctive brand identity, customize it to their specific business focus and optimize its potential in the market,” he stated. Wingefors had earlier expressed that he deserved the criticism for what transpired at Embracer.
Embracer is partitioning into three companies: Asmodee Group, Coffee Stain and Friends, and Middle-earth Enterprises and Friends. The latter two are working names, with the official titles to be announced in due course.
Wingefors provided clarification on another major point of Embracer’s disclosure, which is that it has secured €900 million from a consortium of banks. This fund is approximately equivalent to the debt that is being transferred from Embracer to Asmodee. Embracer selected Asmodee to take on the debt because the banks see its business—tabletop games—as more stable than the video gaming sector.
“The banks love Asmodee; they know the company has been highly leveraged on their private equity ownership for more than a decade,” Wingefors said. “That amount is basically paying down the debt–not all, but most of the debt–in the remaining Embracer Group, meaning Coffee Stain & Friends and Middle-Earth & Friends. Basically, we are in a much better position from a balance sheet perspective today.”
Wingefors said the financial market in general does not enjoy the “volatility” of the AAA games space.
In February this year, Embracer disclosed that it canceled 29 unannounced games and laid off nearly 1,400 people in the previous six months as part of its previously announced restructuring effort.
Embracer made these drastic cuts in part due to a major deal falling through at the 11th hour, which has subsequently been revealed to be a pact with Saudi Arabia’s Savvy Games. Embracer previously took $1 billion from Saudi Arabia and defended that decision when people criticized Saudi Arabia’s position on human rights.
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