STOCKHOLM, Dec. 21, 2021
STOCKHOLM, Dec. 21, 2021 /PRNewswire/ -- Embracer Group AB ("Embracer") has entered into an agreement to acquire 100 percent of the shares in Perfect World North America Corporation and Perfect World Publishing B.V. (collectively "Perfect World Entertainment" or "PWE"), from Perfect World Europe B.V. ("Perfect World"). PWE is a video game developer and publisher for PC and consoles, including PWE Publishing and Cryptic Studios. The acquisition adds on a total of 237 employees. The purchase price for the acquisition comprises a one-time payout of USD 125 million, divided into of USD 60 million in cash and USD 65 million in B shares of Embracer subject to consideration adjustment at closing. The purchase price net of cash amounts to USD 103 million.
 Acquired through Embracer and will be part of the Gearbox Entertainment operative group.
Background and rationale
Upon completion of the transaction, PWE will operate within the Embracer group as a subsidiary of Gearbox Entertainment Company, with a continued focus on publishing and creating games. PWE comprises a team of 237 full time employees, including the team behind the publishing unit. Through the acquisition of PWE, Gearbox Entertainment will onboard PWE Publishing and Cryptic Studios, which will both remain independent within Gearbox Entertainment. This acquisition will strengthen Gearbox Entertainment's Publishing division.
Founded in 2000 and headquartered in Los Gatos, California, Cryptic Studios is one of the rare handful of studios with experience launching and operating multiple MMOs (Massively Multiplayer Online Games) at scale. The studio has a track record of success with three of the last four launches achieving meaningful commercial success. Neverwinter and Star Trek Online continue to be top performing MMOs with highly engaged user bases. Cryptic comprises a team of 136 employees.
Founded in 2008 and headquartered in Redwood City, California, PWE Publishing is known for publishing leading PC and console titles based on well-known global entertainment franchises such as the Star Trek and Dungeons & Dragons games by Cryptic Studios. PWE Publishing's product portfolio also includes the popular Torchlight series, as well as Remnant: From the Ashes, in partnership with Embracer owned development studio Gunfire Games. PWE Publishing comprises at team of 101 employees.
During 2021, PWE had operating losses stemming from the cancellation of Cryptic's newest MMO (Magic: Legends) and a gap in PWE Publishing's release schedule. Embracer is highly confident that under its leadership, both Cryptic and PWE Publishing will be strong financial contributors in addition to their strategic value with new IP and an MMO capability that has been missing from Embracer's portfolio.
Cryptic Studios currently operates three longstanding MMOs (Neverwinter, Star Trek Online and Champions Online) with a shared life span of 25+ years. These titles generate significant profits, and Embracer expects the live Cryptic titles will continue to be strong and steady for the upcoming years. PWE Publishing has a compelling slate of upcoming games while continuing to evaluate new opportunities. Of the existing slate, PWE's next launch is planned in 2022 with five additional releases by 2024. In calendar year 2021 the companies are estimated to generate net sales of approximately SEK 700 million. This includes some revenues from discontinued products at Cryptic.
Embracer Group forecasts that the transaction will contribute a breakeven operational EBIT during FY 22/23 and SEK 200-300 million during FY 23/24. These forecasts exclude any notable commercial or cost synergies.
"It's an honor for us to welcome this talented group of individuals into the Gearbox Entertainment family. Gearbox will invest into the future of Cryptic as an independent, dynamic studio that is passionate about MMOs. That commitment is paired with an exciting new partnership that will emerge as the talented Perfect World publishing team and their promising line up of future games will become supported and bolstered by the capability and strength of the Gearbox Publishing team," said Randy Pitchford, founder of Gearbox Entertainment Company
" It has been an amazing journey being a part of Perfect World, and we thank them for all of their support throughout the years. PWE is delighted to become a part of the Embracer family, and join Gearbox on their mission to entertain the world. We are eager to apply our vast experience and talents to benefit both shareholders and customers around the world," commented Yoon Im, CEO of PWE.
Purchase price and lock up
Subject to closing adjustments, the USD 125 million purchase price comprises a one-time payout, divided into USD 60 million in cash and USD 65 million in B shares of Embracer. The purchase price net of cash amounts to USD 103 million. 50 Percent of the shares to be issued are subject to a one-year (12 months) lock-up period and 50 percent of the shares to a two-year (24 months) lock-up period.
The shares to be issued as part of the consideration are issued at a price of SEK 90.81 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 17 December 2021, and using the FX rate USD/SEK of 9.1358 as of 17 December 2021.
The shares to be issued represent approximately 0.60 percent and approximately 0.39 percent of the total number of shares and votes in Embracer, respectively, on a fully diluted basis. By issuing the shares, the number of shares will increase by 6,570,386 to 1,090,861,313 and the number of votes increases by 6,570,386 to 1,692,045,779 (divided among 66,798,274 A shares and 1,024,063,039 B shares). The share capital will increase by approximately SEK 9,125.54, from approximately SEK 1,505,959.91 to approximately SEK 1,515,085.45.
Upon completion of the transaction the board of directors will resolve to issue the shares pursuant to authorization granted by a general meeting.
Completion of the transaction
The transaction was signed as of 21 December 2021 and is expected to close in February 2022. Completion of the transaction is conditional upon customary conditions including regulatory merger control clearance.
Juno Capital Partners acted as M&A and strategic advisor to Embracer and Gearbox Entertainment. Fenwick & West acted as legal counsel. EY acted as financial and tax advisor to Embracer and Gearbox Entertainment.
For additional information, please contact:
Lars Wingefors, Co-founder and Group CEO of Embracer Group AB
Tel: +46 708 47 19 78
Dan Hewitt, Chief Communications Officer, Gearbox Entertainment
About Embracer Group
Embracer Group is the parent company of businesses developing and publishing PC, console and mobile games for the global games market. The Group has an extensive catalogue of over 250 owned franchises, such as Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory, Wreckfest, Insurgency, World War Z and Borderlands, amongst many others.
With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its eight operative groups: THQ Nordic, Koch Media Publishing, Coffee Stain, Amplifier Game Invest, Saber Interactive, DECA Games, Gearbox Entertainment and Easybrain. The Group has 86 internal game development studios and is engaging more than 9,000 employees and contracted employees in more than 40 countries.
Embracer Group's shares are publicly listed on Nasdaq First North Growth Market Stockholm under the ticker EMBRAC B with FNCA Sweden AB as its Certified Adviser; firstname.lastname@example.org +46-8-528 00 399.
Subscribe to press releases and financial information:
Press Release - Embracer Group enters into agreement to acquire Perfect World Entertainment
The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in Embracer in any jurisdiction, neither from Embracer nor from someone else.
This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in Embracer's shares. Any investment decision regarding Embracer's shares must be made on the basis of all publicly available information relating to the company and the company's shares. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. This announcement does not constitute a recommendation. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this announcement and publicly available information. The price and value of securities can go down as well as up. Past performance is not a guide to future performance.
This press release contains forward-looking statements that reflect the company's intentions, beliefs, or current expectations about and targets for the company's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the company operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Embracer does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither Embracer nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq First North Growth Market's rule book for issuers.
This information was brought to you by Cision http://news.cision.com
The following files are available for download:
PR_Perfect World Entertainment