All conditions for the Transactions, including regulatory approvals such as merger control clearance, have now been fulfilled and the Transactions are consequently completed.
Embracer and Gearbox announced in February of 2021 their intention to merge. With this, Gearbox Entertainment is the seventh operating group in the Karlstad, Sweden-headquartered Embracer Group, which has an extensive catalogue of more than 240 franchises and more than 7,000 employees around the world. The merger fuels positions Gearbox for rapid growth with its robust IP catalogue, AAA development studios, and North American publishing capabilities.
“Our team is incredibly excited about the opportunity we now have,” said Randy Pitchford, founder of The Gearbox Entertainment Company. “Far from riding off into the sunset, we are now positioned to launch new IP, do more with our existing brands, grow our base of incredibly talented team members, and capitalize on new opportunities in our mission to entertain the world. This just the start."
With its 550 team members in Frisco, Texas and Quebec City, Gearbox Entertainment is best known for its critically and commercially successful Borderlands and Brothers in Arms franchises and the development of award-winning, best-selling games in the Half-Life, Counter-Strike, Tony Hawk’s Pro Skater, 007 James Bond, and Halo franchises.
“This was the largest merger that Embracer has undertaken. I am grateful to Randy and his entire team for their enthusiasm, creativity and vision, says Lars Wingefors, founder and CEO of Embracer Group. "We are confident in Gearbox's long-term future within Embracer Group."
The aggregate day one purchase price of approximately SEK 9.3 billion on a cash and debt free basis has today been paid through a cash payment of approximately SEK 2.5 billion and through issuance of 34,348,903 B shares, corresponding to a value of approximately SEK 6.8 billion. Furthermore, an additional 5,313,559 B shares have been issued today as part of the additional consideration, corresponding to a value of approximately SEK 1.05 billion. These additional consideration shares are subject to claw back rights and lock-up restrictions.
A maximum of 22,465,744 B shares may be issued in the future as additional consideration subject to fulfilment of certain targets. Thereby the total number of shares that can be paid as additional consideration amounts to a maximum of 27,779,303 B shares provided that all targets for payment of the additional consideration are met.
In total 39,662,462 B shares have been issued today, meaning that the number of shares in Embracer Group increases from 460,825,448 to 500,487,910 shares (divided on 33,399,137 A shares and 467,088,773 B shares), and that the number of votes increases from 761,417,681 to 801,080,143. The share issued today lead to a dilution of approximately 7.92 percent of the share capital and approximately 4.95 percent of the votes in Embracer Group based on the number of shares and votes in Embracer Group following completion of the Transactions and issuance of 39,662,462 B shares.
Through the Transactions, Embracer Group may in aggregate issue (including additional consideration shares) a total of 62,128,206 B shares, meaning that the number of shares in Embracer Group can increase from 460,825,448 to522,953,654 shares (divided on 33,399,137 A shares and 489,554,517 B shares), and that the number of votes can increase from 761,417,681 to 823,545,887.
All shares issued today and that may be issued in the future, are issued at a price of SEK 197.57 per B share, corresponding to VWAP 20.
The Transactions will, if all additional consideration shares are issued, lead to a dilution of approximately 11.88 percent of the share capital and approximately 7.54 percent of the votes in Embracer Group based on the number of shares and votes in Embracer Group following completion of the Transactions and issuance of all additional consideration shares.
The acquired companies will be consolidated into Embracer Group's consolidated financial statements as of April 1, 2021.