Embracer Group completes restructuring process, focuses on IPs and economic upside

Embracer Group CEO, Lars Wingefors, announces the completion of the company’s restructuring process, highlighting the divestment of Saber Interactive and Gearbox. The company now aims to focus on intellectual properties (IPs) and projects where they can capture the most economic upside.

Embracer Group Completes Restructuring Process

Embracer Group, under the leadership of CEO Lars Wingefors, has successfully completed its restructuring process, which involved the loss of 1,400 jobs and the closure of three studios. This strategic move was aimed at optimizing the company’s operations and setting the stage for future growth.

During an investor call following the recent sale of Gearbox for $460 million, Wingefors highlighted the completion of the restructuring program, which concluded in March. The divestment of Saber Interactive and Gearbox were significant milestones in this process, marking Embracer Group’s commitment to streamlining its operations and focusing on its core strengths.

Embracer Group’s Focus on Intellectual Properties and Economic Upside

Looking ahead, Embracer Group is shifting its focus towards intellectual properties (IPs) and projects that offer the most economic upside. This strategic decision aims to maximize the return on capital deployed and leverage the expertise of its valuable game developers.

By concentrating on IPs, Embracer Group aims to create better products and games that resonate with its audience, while also generating increased profitability and cash flow. This approach aligns with the company’s commitment to delivering high-quality gaming experiences and maximizing value for its shareholders.

No Plans for Further Business Sales

Embracer Group has no intentions of selling any more of its businesses. While the company receives inquiries from interested parties, Wingefors emphasized that these assets are considered vital for the group’s future success and are not for sale. This commitment ensures the stability and continuity of Embracer Group’s operations.

Wingefors acknowledged that the company has received numerous inquiries from companies interested in acquiring certain assets. However, he reiterated that these assets are integral to the group’s long-term strategy and will not be divested.

Gearbox Sale Based on Strategic Considerations

The decision to sell Gearbox was not a reflection of dissatisfaction with the development team but rather a strategic move based on the negative cash flow for Embracer Group. Gearbox had ambitious plans for expansion and the creation of new titles, which required significant capital expenditure and introduced business risks.

Given the current environment, reducing capital expenditure and business risks was deemed the best outcome for Embracer Group. Wingefors clarified that the decision to sell Gearbox was driven by financial considerations and the need to optimize the company’s resources.

Embracer Group’s Restructuring Program and Future Plans

Embracer Group initiated its restructuring program in June 2023, following a deal worth at least $2 billion falling through. Since then, the company has undertaken significant measures, including laying off over 1,400 employees and closing down studios.

With the completion of the restructuring process, Embracer Group now consists of 111 internal games development studios and numerous other businesses across various operating groups. The company’s focus moving forward is on leveraging its assets effectively, increasing profitability, and generating cash flow through the creation of better products and games.

While the possibility of further layoffs remains uncertain, Embracer Group is committed to continuously evaluating options for success. More information regarding the restructuring program will be provided in the Q4 report on May 23.