Embracer Group, the Swedish gaming conglomerate which owns Asmodee, a major French tabletop gaming company with names like Days of Wonder, Ticket to Ride, Fantasy Flight Games, and various Lord of the Rings games--along with and Dark Horse Comics, Edge Studios, a subsidiary which produces the current range of Star Wars TTRPG books, and Fantasy Flight Games--is to split into three companies, the company has announced. Embracer Group owns or controls over 9,000 different IPs, including Middle Earth Enterprises, which it acquired in August 2022.
The company has been going through a rough time, with hundreds of layoffs, the closures of various studios like Saints Row developer Volition and Timesplitters' Free Radical Design, and the sales of developers such as Saber Interactive, which made the Star Wars: Knights of the Old Republic remake, and Gearbox Entertainment, which makes Borderlands and Duke Nukem. Restructuring began in June 2022, with 1,387 staff laid off, represents 8% of the company's worldwide workforce. 29 unannounced games were also cancelled, as was a new Deus Ex game. The financial turmoil was caused by the breakdown of a $2B deal with Savvy Games Group, a Saudi government funded company.
“The Board of Directors of Embracer Group AB (“Embracer Group”) today announces a transformative step for value creation through a separation of the group into three market-leading games and entertainment companies: Asmodee Group, “Coffee Stain & Friends” and “Middle-earth Enterprises & Friends”. The three entities will be separate, publicly listed companies, enabling each entity to better focus on their respective core strategies and offer more differentiated and distinct equity stories for existing and new shareholders. This will enable the entities to unlock value in the high-quality assets of Embracer Group following the successful completion of the restructuring program.”
The three new companies are:
- Asmodee (tabletop gaming)
- Coffee Stain & Friends (premium and free-to-play PC, console, and mobile gaming)
- Middle-earth Enterprises & Friends (AAA games, LotR content, plus Dark Horse Comics and Tomb Raider)
Edge Studios, which holds the TTRPG titles previously produced by sister-sute Fantasy Flight Games, is known for TTRPGs such as Arkham Horror, Legend of the Five Rings, Midnight, and Star Wars (along with the Genesys universal game system). These titles will be produced by the new Asmodee company.
Asmodee will be spun off within the next 12 months, with Coffee Stain moving during 2025. Asmodee in its current form, which Embracer acquired in March 2022, produces over 300 well-known tabletop games such as Ticket to Ride, Catan, and Exploding Kittens, with licensed tabletop games based on Lord of the Rings, Marvel, Lego, and Star Wars in development.
Embracer Group AB (”Embracer Group”) has, as part of its decision to transform the group into three separate publicly listed entities, which is further described in a separate press release announced today, entered through Asmodee into a financing agreement with JP Morgan, BNP Paribas, SEB, Societe Generale and Swedbank. The financing amounts to EUR 900 million (approximately SEK 10.5 billion) with a maturity up to 18 months and on similar terms as the previous loan. The financing agreement creates a strong foundation for building an optimal capital structure for the three entities.
The financing is an important part of the debt refinancing of Embracer Group following its restructuring program, which was finalized 31 March, 2024. The loan at Asmodee level has a maturity up to 18 months on similar terms as Embracer Group’s existing SEK 8 billion loan with maturity in February 2025. The loan is ringfenced with no recourse to Embracer Group, separating Asmodee’s assets and funds from those of Embracer Group, and it is only secured by Asmodee assets. The loan will be used to refinance Embracer Group’s existing SEK 8 billion loan with maturity in February 2025, and to reduce the revolving credit facilities by SEK 1 billion to SEK 8 billion. The previously communicated mandatory amortization of SEK 2.6 billion until January 2025 is no longer needed due to the repayment of the SEK 8 billion loan with maturity February 2025. The existing revolving credit facilities mature in May 2025.
The intention is to continue to deleverage, through both the expected significantly improved Free Cash Flow in the remaining Embracer Group (excluding Asmodee), as well as the proceeds from the divested assets of Saber Interactive and Gearbox Entertainment in the course of FY24/25.
On a pro forma basis as per LTM[1] December 2023, Embracer Group, including the expected sales proceeds from the divestment of assets from Saber Interactive and Gearbox Entertainment, but excluding Asmodee, will have a Net Debt-to-Adjusted EBIT of around 0.6x. On a pro forma basis as per LTM December 2023, Asmodee will have a Net Debt to Adjusted EBITDA of approximately 3.9x. 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.
