May 24, 2023 - Technology

$2 billion partnership deal falls through for Embracer Group

Video game screenshot of zombies on a beach

The Embracer Group's Dead Island 2, which sold more than 2 million copies since its April launch. Image: Embracer Group.

The sprawling Swedish video game company The Embracer Group is reeling following its announcement that a "transformative" partnership that's been negotiated for months fell apart Tuesday night.

Driving the news: Embracer said the collapse of the mega-deal, the partner of which still has not been revealed, was unexpected. Embracer said it had a verbal commitment in October and described negotiations as "taking far longer than expected."

Details: "All documentation was finalized and ready to go as of yesterday," Embracer CEO Lars Wingefors told investors Wednesday morning. "We asked for the execution of the agreement before our Q4 announcement. However late last night we received a negative outcome from the counterparty."

  • Compounding the bad news, the company lowered its earnings forecast for the next year, citing game delays, from a range of $965 million - $1.3 billion down to $655 million - $840 million.

Catch up fast: Embracer has been a voracious purchaser of games, game studios and intellectual property, making more than 20 acquisition deals last year, valued at over $1 billion, according to a Drake Star report.

What they're saying: "It's been a rough night," Wingefors said in a livestream today.

  • "But, hey, this is business."
  • Asked if the negative outcome was the last word on the partnership, Wingefors said the message Embracer got from the would-be partner was that the deal "made perfect sense, so it was other decisions impacting them than the agreement itself."

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