4A Games
Embracer Group, through its wholly-owned subsidiary Saber Interactive, has entered into an agreement to acquire 100% of Malta-based 4A Games.
4A Games is a top-tier independent AAA PC and console developer behind the successful Metro franchise and a long-term development partner to the Embracer owned publisher Deep Silver.
Through the acquisition, Saber Interactive onboards a reputable team of 150+ people across two studios in Malta and Ukraine as well as best-in-class internally developed and owned First-Person-Shooter (“FPS”) technology to the Group. The upfront purchase price amounts to approximately MUSD 36 on a cash and debt free basis and is paid in cash and in newly issued B shares, plus an earn-out consideration, subject to fulfilment of agreed milestones, of a maximum USD 35 million. 4A Games expects net sales of approximately MEUR 20 for the period Jan-Dec 2020, with an operational EBIT of approximately MEUR 12.
“With the acquisition of 4A Games, Saber Interactive is locking-up one of the best indie studios in the industry with the potential and capacity to take on another AAA project and are also internalizing the value of existing and future IPs into the Group. Saber solidifies its position as a leader in the CIS and Ukrainian game developer market. Combining our technology and capabilities with 4A Games presents tremendous opportunity for growth and expansion” says Matt Karch, CEO Saber Interactive Inc., Director of the Embracer Board.
“Embracer Group and Saber Interactive are the perfect partners for 4A Games and for our next phase of growth. Together we will continue to build on the Metro franchise and will focus on bringing a multiplayer experience to our fanbase. We look forward to building a new and even more ambitious AAA IP in the near future” says Dean Sharpe, CEO 4A Games
4A Games is a top-tier AAA games development studio behind the Metro series, first released in 2010. The company was founded by three alumni developers of GSC Game World in Kyiv, Ukraine in 2005. In 2014, the studio expanded by opening a new studio and relocated headquarters with approximately 50 staff to Sliema, Malta. The team today consists more than 150 people with a unique and diverse set of backgrounds who together have developed a worldwide success with the Metro series. 4A Games have also developed and released ARKTIKA.1 in 2017, a highly immersive VR shooter for Oculus Touch.
Conceived in 2005 when the studio was first established, the 4A Games’ development engine has powered all 4A Games’ titles to date and is constantly improved in-house to stay at the forefront of innovation in the industry. Natively multi-platform and scalable with robust functionality and integrations, 4A Games’ proprietary engine offers leading technology for single player FPS development and compliments Saber Interactive's development and live operations technology.
The acquisition marks an important milestone in the longstanding relationship between 4A Games and Deep Silver/Koch Media, who will continue to explore the Metro franchise together with Dmitry Glukhovsky going forward. Embracer will see development and royalty cost savings from released Metro titles and future games as well as development margin savings between Deep Silver and 4A Games. Other synergies between 4A Games and Embracer group companies include among other things technology, development resources, IP catalog and business development.
Within the Embracer Group, 4A Games will operate as an independent studio under Saber Interactive. 4A Games will significantly strengthen Saber’s development capabilities in Ukraine and are currently collaborating on an entirely new project that combines the AAA production values of 4A Games, combined engine and technology know-how and Saber’s experience on multiplayer and live operations. 4A Games has also initiated development on a brand new AAA IP that leverages its decade of experience on developing the Metro series.
New World Interactive
Embracer Group, through its wholly-owned subsidiary Saber Interactive, has entered into an agreement to acquire 100% of the shares in US/Canada based New World Interactive.
NWI is an award-winning indie-spirited creator and developer of First-Person-Shooter (“FPS”) IPs for PC founded in 2010 in North America.Through the acquisition, Embracer Group adds its first studio in Canada and establishes a strong foothold for further growth.
NWI consists of a passionate team of approximately 40 people headquartered in Denver, CO (USA) with a development studio in Calgary, AB (Canada) including approximately 35 game developers led by Keith Warner (CEO). NWI has released three proprietary PC titles, developed a dedicated fanbase of more than 10 million gamers and is workingwith an exciting project pipeline with the potential to achieve AAA results in the marketplace. The purchase price will not be disclosed. Embracer expects to recoup its investment over the course of approximately 3 years as current development projects are released. Closing of the transaction is conditional upon customary conditions and closing is expected to take place during the [third calendar quarter 2020].
“NWI is a gamer-centric company that has created great franchises with devoted and loyal fans. With the aid of Saber’s backend technology, NWI will be better positioned to leverage its capabilities for providing games as a service . Saber will also provide resources to bring NWI’s hit titles to new platforms where we expect revenues will greatly increase. We are excited for them to join our growing team of talented developers.” says Matt Karch, CEO Saber Interactive Inc., Director of the Embracer Board
NWI was founded in 2010 as a remote mod-team and has throughout the years developed into a PC FPS specialist best known for the creation of the team-based multiplayer series Insurgency. The game Insurgency was first released in 2014 and the sequel to the original game, Insurgency: Sandstorm, was released in 2018. In June 2020, NWI released the first batch of additional content to Insurgency: Sandstorm and will continue to serve its dedicated fanbase with quarterly releases going forward. Together, approximately 7 million copies of the Insurgency series have been sold on PC alone and the original game holds a 90 percent rating on Steam. NWI has also developed Day of Infamy, taking Insurgency’s gameplay and bringing it to World War II, which was released in 2017. To date, NWI's three proprietary titles have collectively generated more than MUSD 50 in revenues.
Following the success of Insurgency in 2014, the team doubled in size between the years 2014 and 2017 with a studio in Denver where the core team worked. In 2019, as Insurgency: Sandstorm was released and in anticipation of sustained growth after a successful launch, the company opened a studio in Calgary, ON (Canada). Today NWI engages 39 onsite FTEs and 6 freelancers in Calgary, AB (Canada) and Denver, CO (USA). The near-term target is to add another 50+ people in Canada with the Calgary studio and the addition of a new studio in Montreal. NWI is currently working on a new unannounced owned IP and has partnered with Saber Interactive Inc (“Saber”) for the Console versions of Insurgency: Sandstorm expected to be released in the first half of 2021. Keith Warner (CEO) and the leadership team at NWI are retained and will continue to operate as an independent studio within Saber.
“As part of Embracer Group and Saber Interactive, NWI will have access to publishing, marketing and other development resources to help grow and scale quickly. This will among other things improve development quality and add new platforms – we’re simply delighted to join” says Keith Warner, CEO NWI
Through the acquisition, Embracer adds a passionate team, successful IPs and establishes a foothold for further growth in Canada while also strengthening its footprint in the US. This is in line with Embracer long-term strategy of acquiring game franchises and development studios. The Calgary studio will mark Embracer’s first owned studio in Canada, the worlds third largest market for games development1, offering a deep talent pool and reduced costs of development relative to other territories. Embracer will support NWI to realize its expansion plan in Canada with the Calgary studio and the addition of a new studio in Montreal.
Embracer is acquiring 100 percent of the share capital in NWI paid with cash and newly issued B shares in Embracer priced at a 20 day volume weighted average price of Embracer B shares on Nasdaq First North Growth Market up to and including 12 August 2020. NWI will operate as an independent studio under Saber. Embracer sees great opportunity to further exploit the partnership between NWI and Saber on both existing and new IPs and to capture the bulk of NWI’s revenues internally going forward.
NWI will continue to serve its growing fanbase of 10 million gamers, that have proven willing to spend time and money on additional content, with quarterly releases and will leverage Saber’s backend technology to expand its service capabilities and support the shift to a Premium GaaS and LiveOps model.
Closing of the transaction is conditional upon customary conditions and closing is expected to take place during the [third calendar quarter 2020].
Deca Live
Embracer Group has entered into an agreement to acquire 100% of the share capital in Germany-based Deca Live Operations GmbH.
DECA Games, founded by Ken Go, who is also the seller, is a mobile asset care and live operations (“LiveOps”) expert within the Free-to-Play (“FTP”) games segment.Through the acquisition, Embracer Group adds a strong team forming a key pillar in building a growing and profitable mobile and FTP business within the group while DECA will benefit from Embracer’s IP catalog, access to capital and deal flow. The upfront purchase price amounts to approximately MEUR 25 and is paid in newly issued B shares, plus an earn-out consideration, subject to fulfilment of agreed earnings targets, of a maximum of approximately MEUR 60.
“I’m very pleased to welcome Ken and the DECA team to our Group. We have been looking for an opportunity to enter the mobile and FTP segment for a while and with Ken and DECA we have found an ideal steppingstone. DECA’s strength in asset care is an area with many similarities to the Embracer foundations” says Lars Wingefors, Group CEO Embracer.
"It is with great pleasure and excitement for the future that DECA joins Embracer today. We see a tremendous opportunity for our business on the FTP market and partnering with Lars and the Embracer Group will amplify our ability and ambition to take DECA to the next level.", says Ken Go, CEO DECA
DECA was founded by Former Kabam Europe GM Ken Go in 2016 and is best known for acquiring established game IP, assets and licenses and apply operating expertise to grow audience and improve profitability. To date, DECA has eight game IPs in the portfolio and an exciting pipeline of acquisitions. DECA is headquartered in Berlin with employees residing in 14 different countries. The Globally distributed team of over 100 people have diverse experiences across FTP platforms and game genres.
The transaction marks the beginning of a long-term partnership between Embracer and Ken Go who will continue as CEO and run DECA as an independent entity within Embracer for the foreseeable future. As part of the transaction, Ken Go will be entitled to the Earn-Out Consideration Shares. The Earn-Out Consideration Shares are linked to the financial performance of DECA over the next seven years, which creates long-term alignment between Ken Go and Embracer.
DECA forms the sixth operative group within Embracer and is a key pillar in building a mobile business, applying the established asset care strategy to a new market: Mobile and FTP. Mobile and FTP is highly complementary to Embracer’s existing, fast growing business within premium PC/console game development and publishing and the new segment presents big opportunities in a soaring market. Embracer plans to reinvest cash flows and contribute additional funding to DECA who creates a new platform for acquisitive growth within Embracer.
DECA’s highly profitable, cash generative and scalable FTP and LiveOps model along with their expertise within mobile is applicable on all FTP games, but emphasis going forward is mainly on mobile or cross platform games. The ambition is to build a diversified portfolio of established mobile IP’s, while utilizing current IP’s on mobile platforms and experiment with FTP mechanics. Access to capital, deal flow, IP catalog, knowledge sharing and experienced developers within Embracer will amplify DECA’s growth going forward. The transaction is in line with Embracer’s long-term growth strategy of acquiring game franchises and development studios.
Vermila Studios
Embracer Group’s wholly owned subsidiary Amplifier Game Invest acquires the ten-person strong game development studio Vermila Studios.
Amplifier Game Invest acquires 100% of the shares in Vermila Studios by paying the two founders an up-front consideration of EUR 0.9 million, of which 60% is paid in cash and 40% is paid in Embracer Group B shares. Earnout consideration may also be paid out to the two founders in Embracer Group B shares if certain financial targets are met over the coming 5–10 years:
- Earnout 1: EUR 1 million in Embracer Group B shares if aggregate net contribution the coming 5 years equals or exceeds EUR 15 million.
- Earnout 2: EUR 1 million in Embracer Group B shares if aggregate net contribution the coming 10 years equals or exceeds EUR 30 million.
The shares issued as up front consideration and, any earn-out shares that may be issued, are issued at a price of SEK 142.12 per share which equals the 20 day volume weighted average price of Embracer Group B shares on Nasdaq First North Growth Market up to and including 10 August 2020. A total of 26,090 Embracer B shares are issued as up-front consideration.
Vermila Studios is currently working on their first production, Crisol: Theater of Idols. The game is a first-person horror adventure set in the town of Tormentosa, a Hispanian village with an ancient past, with captivating visuals based on warm Spanish red and gold colors.
The two founders of Vermila Studios, David Carrasco and David Tornero have worked together since 2017, and have created a diverse team of talented Spanish game developers. The Crisol IP is developed in the studio and the team is eager to expand the concept further in the future, opening the possibilities for strong sequels in the Crisol universe.
With this acquisition, Amplifier Game Invest extends its existing network of highly creative game studios and is looking forward to a fruitful, long-term partnership with the Spanish studio.
Rare Earth Games
Amplifier Game Invest, a wholly owned subsidiary of Embracer Group acquires the Austria-based development studio Rare Earth Games with a team of highly experienced industry veterans. The acquisition marks the first investment by Amplifier Game Invest in Austria. Rare Earth Games focus on action-packed multiplayer game titles for PC, Consoles and Cloud services.
Amplifier Game Invest acquires 100% of the shares in Rare Earth Games by paying the three founders an up-front consideration of EUR 0.3 million, of which 70% is paid in cash and 30% is paid in Embracer Group B shares.
Earnout consideration may also be paid out to the three founders in Embracer Group B shares if certain financial targets are met over the coming 5–10 years:
- Earnout 1: EUR 1 million in Embracer Group B shares if aggregate net contribution the coming 5 years equals or exceeds EUR 12 million.
- Earnout 2: EUR 2 million in Embracer Group B shares if aggregate net contribution the coming 10 years equals or exceeds EUR 28 million.
The shares issued as up-front consideration and, any earn-out shares that may be issued, are issued at a price of SEK 142.45 per share which equals the 20 day volume weighted average price of Embracer B shares on Nasdaq First North Growth Market up to and including 11 August 2020. A total of 6,504 Embracer B shares are issued as up-front consideration.
The Rare Earth leadership team, Michael Borras, Helmut Hutterer and Peter Ehardt, has experience as founders of Iron Mountain Interactive and Socialspiel Entertainment, with backgrounds at Deep Silver and Rockstar Games. Together with a strong technical and creative team, they will spearhead the work on Rare Earth’s first game, a fresh take on online co-op survival action.
Palindrome Interactive
Amplifier Game Invest, a wholly owned subsidiary of Embracer Group, acquires the remaining 50% of the shares in Palindrome Interactive, a 14-person strong game studio located in Skövde, Sweden. The acquisition makes Palindrome Interactive a wholly owned subsidiary of Amplifier Game Invest.
Amplifier Game Invest acquires the remaining 50% of the shares in Palindrome Interactive by paying the remaining four founders an up-front consideration of SEK 21.5 million, of which 70% is paid in cash and 30% is paid in Embracer Group B shares. Earnout consideration may also be earned by the four remaining founders in Embracer Group B shares if certain financial targets are met over the coming 5–10 years:
- Earnout 1: SEK 10 million in Embracer Group B shares if aggregate net contribution the coming 5 years equals or exceeds SEK 125 million.
- Earnout 2: SEK 10 million in Embracer Group B shares if aggregate net contribution the coming 10 years equals or exceeds SEK 350 million.
The shares issued as upfront consideration and earnout shares are issued at a price of SEK 142.03 per share which equals the 20 day volume weighted average price of Embracer Group B shares on Nasdaq First North Growth Market up to and including 12 August 2020. The earnout shares are issued at closing and are subject to clawback rights if the financial targets are not met. A total of 186,225 Embracer Group B shares are issued as upfront consideration and earnout consideration.
Palindrome Interactive has been partially owned by Amplifier Game Invest since 2017 and is currently in the process of releasing their first game, Immortal Realms: Vampire Wars, on 28 August, on PC, PlayStation, Xbox, and Nintendo Switch.
The creative team at Palindrome is currently working on the studio’s next title, and as of yet unannounced strategy game, which has been signed to be published by Coffee Stain Publishing.
Pow Wow Entertainment
Embracer Group wholly owned subsidiary THQ Nordic GmbH acquires 100% of Austria-based Pow Wow Entertainment for an undisclosed consideration.
Pow Wow Entertainment was founded in 2019 by Milo Gutmann and Jerome Amouyal and is based in Vienna, Austria. The studio currently employs 20 developers with AAA and GaaS experience. The team focuses on developing original IPs for PC and consoles with the goal to create entertainment brands with a strong culture of community driven development and tools for user-generated content.
Currently, the team is working on two unannounced games of which one on an existing THQ Nordic-owned IP and the other will be a roguelike multiplayer platformer set on a constantly changing world.
Pow Wow will remain an independent development studio, under THQ Nordic, with full creative freedom.
Sola Media
Embracer Group wholly owned subsidiary Koch Film acquires Sola Media. The company, based in Stuttgart, Germany, is a sales agent of international film-and TV-rights, distributing children and family films across the globe.
Sola Media was founded in 2004 by Solveig Langeland, a Norwegian-born industry veteran who now leads a small team of hand-picked industry experts.
Koch Films acquires 100% of Sola Media for EUR 2.3 million, of which approximately 80% is paid in cash and 20% is paid in Embracer B shares. A total of 32,596 shares are issued at a price of SEK 142.03 per share, which equals the 20 day volume weighted average price of Embracer B shares on Nasdaq First North Growth Market up to and including12 August 2020.
Acquisition highlights: Sola Media has a strategic focus on, and extensive experience in, an attractive niche – animated children and family films. It is an established business with stable profitability and cash conversion and significant pipeline visibility with 12 upcoming signed projects. Synergies from the transaction are expected where i.a. Sola Media provides additional access to content, and Koch Films provides additional access to markets.
Going forward, management estimates net sales of EUR 4–5 million and an operating EBIT of around EUR 1 million per year on average over the coming years. Sola Media is to remain independent with Solveig Langeland committed to remaining as managing director.