The Embracer Group has been one of the most active gaming companies in terms of acquisitions in the past couple of years, gobbling up other firms left and right. However, it seems that not all its deals have made it through.
It was reported earlier this year that the Swedish video game giant suffered a major setback. A deal with an unidentified partner worth $2 billion fell apart. Many speculated that the unnamed partner in the deal was Sony or Microsoft – but now we know otherwise.
However, a new report by Axios reveals that the partner in the collapsed deal was Savvy Group Games. According to the article, the information about the identity of the mysterious partner came from four sources familiar with the deal who were not authorized to speak about it publicly. It is unclear why Savvy backed out of the massive deal.
The deal would have seen Savvy invest in developing and publishing games from Embracer Group. The Saudi-backed company reportedly plans on establishing itself as a major gaming label. These moves have drawn controversy in the gaming sphere, as many draw attention to the moral issues of supporting the business plans of an authoritarian nation that routinely violates human rights.
Saudi Arabia’s Public Investment Fund (PIF) has made plans to invest $38 billion in the gaming industry in an attempt to diversify the country’s economy and turn the Kingdom into a major gaming hub. Part of that money would have gone to the Embracer Group had the deal been closed.
As a result of the failed deal, Embracer announced a large-scale restructuring of its operations and shut down some of its 130 internal studios. The publisher also canceled projects after years of aggressively acquiring gaming studios and IPs. The restructuring plan focuses on cost savings, capital allocation, efficiency, and consolidation of assets.
The publisher recently announced that Campfire Cabal, a studio that was established last year under THQ Nordic, will be closing down. “This decision was not related to the work we’ve been doing at the studio but was made from a purely financial standpoint,” the studio wrote.
“We want to make it clear that our management and the rest of the team have not given up on Campfire Cabal yet, and neither have our friends at THQ Nordic. We are still pursuing our options for finding a good resolution to this situation, and THQ Nordic has been very supportive throughout this difficult time.”
The Embracer Group will be announcing its latest quarterly earnings this Thursday. The publisher is expected to detail cost reduction measures that it plans to have in place by October 1, which might include more closures and cancellations.
Savvy has recently become a massive shareholder in the biggest gaming companies in the world. The company is currently the biggest shareholder of Nintendo and is a major shareholder of Electronic Arts and Take-Two Interactive.
Interestingly, Savvy has also invested in the Embracer Group in the past. The company’s total investment in the Swedish publisher has reached $1 billion. Savvy Games also recently announced plans purchased mobile game developer Scopely for $4.9 billion.
