Embracer Group is restructuring into three separate companies.

The press release is wild and starts with embracer announcing "A transformative step for value creation through a separation of the group into three market-leading games and entertainment companies."

Key process components:

• Shares of Asmodee Group (“Asmodee”) and “Coffee Stain & Friends” are intended to be distributed as a dividend to the shareholders of Embracer Group and listed on Nasdaq Stockholm, in accordance with the Lex ASEA rules. “Middle-earth Enterprises & Friends” is intended to remain within the current listed company Embracer Group, which will subsequently be renamed.
• The listing and distribution of shares (the “distribution” or “spinoff”) in Asmodee is expected to take place within 12 months and the listing and distribution of shares in “Coffee Stain & Friends” during calendar year 2025.
• As part of the Asmodee separation process, Embracer Group has, through Asmodee Group, entered into a new financing agreement amounting to EUR 900 million. The proceeds from the financing are used to repay existing debt and reduce leverage in the remaining Embracer Group. As announced today and further detailed in a separate press release available at embracer.com/investors.
• As part of the transformation and ahead of each separation the full capital structure, including both equity and debt, will be reviewed in Asmodee and “Coffee Stain & Friends” to create the best possible long-term foundation for each entity as a separately listed company.
• The largest shareholder, Lars Wingefors AB, intends to form a new long-term ownership structure, including the current holdings in Embracer Group (approximately 20% of capital and 40% of votes), and will remain a long-term, active, committed and supportive owner of all three entities.
• Shareholders representing more than 50 percent of the capital and votes in Embracer Group have expressed support for the transformation plan.

The three separate publicly listed entities are expected to consist of:

• Asmodee, a global leading tabletop games publisher and distributor with an extensive studio network and IP catalogue.
  • Net Sales of SEK 14.8 billion and Adjusted EBIT of SEK 1.9 billion on a pro forma basis as per LTM[2] December 2023
• “Coffee Stain & Friends”, a diverse gaming entity with a dual focus on indie and A/AA premium and free-to-play games for PC/console and mobile, with a high degree of recurring revenues.
  • Net Sales of SEK 10.9 billion, Adjusted EBIT of SEK 2.8 billion on a pro forma basis as per LTM December 2023.
• “Middle-earth Enterprises & Friends”, a creative powerhouse in AAA game development and publishing for PC and console, as well as the stewards of The Lord of the Rings and Tomb Raider intellectual properties, among many others.
  • Net Sales SEK of 14.1 billion, Adjusted EBIT SEK 2.0 billion on a pro forma basis as per LTM December 2023.

It's worth reading the whole thing if you enjoy a bunch of corporate bullshit doubletalk and the schadenfreude of seeing hubris rewarded with failure, but behind all the garbage are real people's lives who have been upended because of this whole transparently idiotic project. It's been bad for games, yes, with a lot of studios disrupted and projects canceled, but it's been worse for developers who have lost their jobs and had their lives completely turned upside down by corporate practices that even outsiders could see had no shot of actually paying off.

Embracer will be a legend of the industry up there with the original THQ. Just dumb, dumb, management stuff in an industry where even smart managers are struggling to keep studios together and continue making profitable games.

The "and Friends" moniker is incredibly bizarre. At least it'll help me remember which companies are still owned by king dumbass Lars Wingefors.

As you said, I wish any sort of change to Embracer was beneficial to the people who've suffered under it, but this sure doesn't seem like it. Really tough to laugh at the stupidity of it all when so many careers and lives have been negatively affected.

@allthedinos: The and friends name, to me, just means "we don't really know what to call this random group of companies." The divisions do make sense thematically, but because Embracer just bought a bunch of companies without much strategy these are companies that don't really belong together.

My favorite part, though, is calling one of the companies "Middle Earth & Friends." What happens if they lose the Lord of the Rings license (they appear to own at least part of it outright, but copyright law is complex) or just decides not to make Lord of the Rings projects for a time (there certainly have been fallow periods for the license.)? And what are the logos and title screens going to look like? Is it going to mention Middle Earth in Tomb Raider games? Just strange stuff!

For as stupid as the "& Friends" moniker sounds, I'd just like to say "Middle-earth Enterprises" sounds as equally as dumb. Just picturing the Eye of Sauron in a tie and business suit asking orcs about TPS report cover sheets.

People don't maybe understand how big Asmodee has become in the tabletop and boardgaming industry. That division being its own entity makes a lot of sense and it will likely be fine financially after this finalizes.

@zombiepie: You're probably right, but that's also kind of the point. Embracer bought that group less than two and a half years ago. It always made sense for it to be its own entity so why did it need such a fleeting embrace?

That's what makes this whole thing so baffling to watch. They collected all this stuff together and then almost immediately had to split it apart.

NO PLAN!

@bigsocrates: Or maybe, this was the plan all along.

*Smiles and slowly crouches behind couch*

Ron Howard narration - "This was definitely not the plan all along".

Now I'm wondering if somebody high up at Embracer is a huge Garfield and Friends enthusiast. It would make everything that happened at that company make a lot more sense. Maybe Lars Wingefors secretly loves U.S. Acres.

They're really banking on Lord of the Rings games making a comeback, huh?

If anything bad happens to Gunfire Games I will personally leave an upper decker inside every single one of toilets in Lars Wingefor's mansion. :)

@bigsocrates: They were trying to establish themselves as a mid-tier publishers, and had a great investor deal. But to be a successful publisher on that level you need a diverse portfolio, so they started acquiring assets. Then the investors pulled out un-expectedly and everything fell apart. The way people have turned this around into "Embracer bad" is really strange. Embracer was an attempt to support "AAA-indie" studios, and its sudden failure has basically nothing to do with their actual projects/products.

@ares42: The closest thing to this version that I've heard is that they were planning on packaging things up to sell to the Saudi government, who are objectively bad guys. They didn't have a plan to actually run Embracer as a business outside that.

The Saudis are the ones who pulled out.

You don't need to buy developers to be a mid tier publisher. Traditionally publishers may have had some in house teams but mostly relied on outside companies with publishing deals. That still happens quite a bit. Many of the companies Embracer embraced were, in fact, independent developers who did work for major publishers.

You certainly don't need to buy companies the size of Gearbox, which was its own publisher.

Embracer never had the capital or the plan to actually make its plan work outside of a massive Saudi cash infusion and it predictably collapsed because they way over-extended. In doing so they caused a lot of issues for a lot of people including massive job loss and dislocation. That's why they're bad. They caused a lot of damage in what was, essentially, a pump and dump scheme to bundle a bunch of companies and sell them off.

And a lot of us asked these exact questions at the time. What's the plan here? How is this going to work? How can you expand this quickly into these business areas and take on so much debt and turn a profit. The answer was they were betting big, with other people's job, on one large, dirty, deal. That's what makes them the bad guys.

@bigsocrates: The Saudi company they had a deal with (Savvy Games Group) is by and large an investor group, with a special interest in growing a gaming industry in Saudi Arabia. They would almost certainly not be interested in buying a bunch of studios all over the world, even if packaged into a single umbrella company.

Embracer (pre re-branding) has been going for two decades at this point, and for the first 15 years or so it was very much focused on trying to pick up "hidden gem" studios lost in the middle. The idea that they weren't trying to run a business has basically no merit.

Yes, they started aggressively expanding when they suddenly caught the interest of bigger investors, and you could call them reckless. But there's little to no evidence that they were just trying to pump and dump companies.

I can't even imagine what a Saudi game industry would look like. I've always been under the impression migrant workers are the workforce but that's probably off base.

@ares42: They wouldn't be interested in buying a bunch of studios but they would be interested in buying a large interest in or taking over Embracer, or so Embracer thought. If Embracer was wrong about that whole concept then they look even more reckless.

Yes Embracer had a history of running a business back when they were THQ Nordic. But saying "pre re-branding" misses the point. They radically shifted strategies and decided to recklessly buy a bunch of stuff for more money than it seemed like it was worse without adequate income to finance their debt. Talking about their pre-rebranding business model is like talking about General Electric back when it made washing machines before it became this weird financial company. Companies change models.

They clearly changed their strategy and their new one was NOT built around buying middle ground studios and nurturing their output to produce modest profits. I mean just look at their rate of acquisition and how it accelerated. It wasn't the same model anymore.

The old model at least had a theory behind it. The new one was designed around attracting a bunch of cash and making the whole mess someone else's problem. It's not a strict pump and dump scheme but it's close enough. They never really had a plan for managing the company you built.

If the goal is to build a business you attract investment or line up debt BEFORE you make your purchases. You don't just buy everything in sight and then frantically look around for a buyer or investor, and then sell it all at a big loss when you don't find one.

@shindig: The Saudis already have a lot of investment in gaming. They own modern SNK among other things, and pieces of other companies.

I was thinking more about investment within Saudi Arabia rather than investing in overseas companies. Their homegrown efforts appear very, very small.

@bigsocrates: If you look at what they bought post re-branding 90+% of it is still in the same exact field they had been working in, with the two exceptions being the bigger (more publicized) Gearbox and Square deals.

I'm not gonna deny that they pulled the trigger early, but they were working with a business partner that had already invested heavily in the company so they had ample reason to believe that the new deal they were negotiating would eventually go through. They weren't just buying willy-nilly hoping to find an investor after the fact.

@ares42: I don't agree that other than those two purchases they were still buying the same core business assets they had been. The Asmodee deal and the Lord of the Rings deal, mentioned right here, are examples of them spending huge amounts of money on companies outside their wheelhouse. And if they hadn't been reckless they would be able to find other investors or issue debt to support running the businesses they bought, instead of running a fire sale on some of them so they can afford to spin off the rest. Someone else would look at the books and say "yes, this business makes sense" instead of "you took on WHAT debt load to buy a board game maker and Lord of the Rings and Borderlands?"

You can say they had a specific "partner" in mind and had reasons to believe they might be able to make a deal, but they did not, in fact, have a binding deal and they still spent enormous amounts of money they didn't have assembling a company that never made sense (even if a prior version of the company did make sense.)

And, again, people had their lives uprooted and their projects dashed to pieces because of this recklessness.

While this was going on I kept asking "how does this make sense, what's the plan here? Isn't this just going to implode" and then it did implode, so your "actually it did make sense because they had a specific investor in mind" argument doesn't really sway me.

If the Saudis had given them the money they probably would be solvent but the strategy would still be kind of baffling to me. Why did you buy all these studios instead of funding projects by them? Why did you tie up a huge amount of your cash in Lord of the Rings and then put out more Star Wars and Disney games while the Lord of the Rings games actually coming out are dire garbage like Return to Moria and Gollum? Why did you buy Gearbox?

Even with sufficient funding none of these moves ever made sense.

Microsoft bought Activision in part because it had a bunch of cash lying around, and it didn't want to pay taxes on that money so instead it used it to expand the business. And there are, of course, significant synergies between the companies. Embracer's purchases seem similar except there was no actual pot of cash (just the possibility of one) and the synergies are harder to understand. It never made sense.

@bigsocrates: You keep stating that their business plan made no sense, but any arguments wether it did or didn't make sense are pure speculation. We can't confirm anything about what their plans with these acquisitions were. For all we know if the deal had gone through they had a spectacular plan that would've made them super successful down the road.

If you don't agree that it makes sense for a company to assume that an already established business partner has a shared interest in keeping their business going there's not really much more to discuss here.

@ares42: It's not pure speculation. The Saudis pulled out. Nobody else wanted to step up (if they ACTUALLY had a brilliant business plan they could have gotten funding from another source like a venture capital group, an investment fund, or a bank) and the company collapsed. Your argument amounts to "well yeah what they did did not work at all, and they never articulated a plan that seems like it would have worked, but it's possible that they had some super secret genius plan nobody knows about so who are we to judge."

We can judge them based on what was said, what was done, and how it turned out. Otherwise you can't judge ANY business failure.

I absolutely don't agree that it makes sense for a company to make a BET THE COMPANY ASSUMPTION that a business partner who has refused to commit to their plan will bail them out. In fact I'd say that's grossly irresponsible. You can make certain assumptions about business partners you have longstanding relationships with but "oh yeah, they'll come through with funding my company needs to survive even though they've refused to sign anything so far so I'm just going to act like I have it" is NOT one of those assumptions.

It's not unheard of in business but it's considered grossly irresponsible. I mean the word "assume" is even in your description of what happened. You never risk your entire company's solvency on an assumption unless it's a VERY safe assumption like "The Euro currency won't suddenly lose all its value overnight" and even then people will hedge.

Your own description of what happened makes them sound incredibly reckless!

@bigsocrates: Yea, I already said that you could absolutely call them reckless. They took a bet on early acquisition and when their planned business fell through they were forced to quickly sell it again. They didn't bet their own company, the company they bought didn't have to shut down. They ended up having to reign in their own company because they had planned for a business negotiation to finalize (which is completely normal). But this is still just a borderline bad business decision that could've easily turned out fine, and in my opinion it doesn't warrant the "Embracer is ruining gaming" narrative we've seen develop lately.

I've thought about this concept off and on for the past few years, and I'm not trying to be argumentative, but I genuinely want to know what it looks like in this modern era for a major sci-fi/fantasy brand to have a fallow period. I feel like the previous fallow period of LotR as a "brand" was really more like "it was unfilmable because the technology didn't exist to adapt it":

1. J.R.R. Tolkien writes the books *fallow period begins*
2. Making tie-in merchandise/spinoff media would be crazy and weird because it doesn't exist yet, this was still decades before Star Wars
3. Tolkien dies *fallow period continues*
4. Try to make some adaptations, do some radio plays, get that wild Ralph Bakshi movie from the 70s, honestly we're still in the fallow period, the Bakshi movie isn't even all 3 books
5. Do nothing for a couple more decades because on a technical level no one knows how to adapt it, and the movie financing for a project like that is probably eaten up by projects like Conan the Barbarian or Braveheart or really any story where you don't need thousands of orcs and a giant tree man
6. Peter Jackson's LotR movie trilogy explodes the brand into mainstream nerd culture, because reading is for nerds but watching movies is for cool guys *puts on sunglasses, fallow period ends*
7. They make a bunch of middling-to-shitty LotR video games, and those bloated Hobbit movies, and the TV show I've never watched, and I continue to die a little bit inside each time

See also: for a long time nobody knew how to make good superhero movie/TV adaptations except as kinda one-off flukes, like Superman 1-2, that Incredible Hulk show, and the Micheal Keaton Batman movies.

Now that Hollywood and streaming services know how to adapt sci-fi/fantasy nerd IP into not embarrassingly bad-looking films and TV shows, it feels like they're just going to ride every IP straight into the ground as long as people will watch it. I'm not saying all sequels are bad, but I am saying that even the bad sequels don't seem to deter the IP owners from making more sequels.

What are some legacy nerd IP that did so badly they've actually gone dormant (say, Star Trek or newer)? I'm genuinely asking, as maybe I'm forgetting some big ones. But, like:

• They keeping making Terminator movies and stuff, even though they've basically all been pretty poor since T2. They absolutely will not stop, ever, until we are dead
• They keep tacking more movies onto the Alien and/or Predator franchises, none of which have really captured the zeitgeist
• After a string of children's TV shows, they're still making terrible live action Transformers movies for teens?...adults?...idiots? If there's any God in this world maybe those movies will continue to tank financially

To disprove my own point, Jurassic Park did enter a 15-year hiatus where it seemed genuinely over and I think we were all fine with this, but then it turns out you can still make a movie people want to see about a dinosaur theme park. And in a weirder example, The Matrix also seemed very much over for about 20 years, but then came back for exactly one movie. Also to give an example that still shocks me to this day, The Planet of the Apes was dormant for nearly 30 years before that 2001 relaunch (then dormant again until the real relaunch for that 2011 movie).

Anyway, it seems like even a string of underperforming and/or widely disliked entries isn't enough to slow down the big IP that are already part of the nerd canon. So my hunch is that Middle Earth & Friends will be more than happy to make Lord of the Rings-themed entertainment for the next century, at the very least. It's what the shareholders crave.

@bisonhero: I think that a lot of licenses still have fallow periods, by which I mean like 5-10 years where they don't produce anything huge. You've mentioned a couple already but I think Dune has been another example (movie in the 80s and some video games and such but then not much until the recent explosion.) Now you can argue there are levels to this and some licenses never go fallow (Star Wars has zero fallow periods because there were always big projects even before the recent movie and TV explosions) but I'm not sure LOTR is on the Star Wars level. Maybe it is. Regardless, while the license will never die, if you're going to build a company around something you need constant projects, and I'm not sure that LOTR is going to be able to survive churning out stuff at the Star Wars pace. Maybe it can; Warhammer seems to do it, but I'm just not sure it's that level of license.

And you're not helping the brand by putting out absolute crap like Gollum!