THQ Nordic Parent Company Embracer Acquires Saber Interactive - NewsWilliam D'Angelo , posted on 01 March 2020 / 1,414 Views
THQ Nordic parent company Embracer Group have acquired publisher and developer Saber Interactive for an initial consideration of $150 million, plus an earn-out consideration of up to a maximum of $375 million. The acquisition includes all of Saber's studios including the ones in Russia, Sweden, Belarus, Spain, and Portugal.
"Saber has been on our radar for a very long time because of their deep history of consistently high-quality work," said Lars Wingefors, Founder and CEO of Embracer Group. "Their ambitious moves towards self-funding projects in recent years have been particularly impressive, especially with World War Z, which sold more than three million units. While Saber will remain a standalone company within Embracer Group, we look forward to collaborating with them to elevate their ability to create and market premier titles."
Co-Founder and CEO of Saber Interactive Matthew Karch added, "Over the course of 19 years as an independent developer, Saber has had its share of suitors. With Embracer Group, we’ve at last found the perfect partner. We could not be more thrilled to see through the many projects we’ve dreamed of together."
Saber Interactive developed World War Z, the Nintendo Switch port of The Witcher 3: Wild Hunt, and more. The studio has over 600 employees across five studios and has 12 projects in development.
Here is an overview of the acquisition:
- The Upfront payment for Saber Interactive amounts to USD 150 million, divided as follows:
- USD 100 million in cash; and
- 6,209,353 B shares of Embracer Group, equivalent of USD 50 million, of which USD 30 million, corresponding to 3,725,612 B shares, are subject to a one year lock-up.
- The Earn-out payment of USD 375 million consists of:
- USD 100 million cash paid two years post closing, which comes with an annual interest rate of approximately 1.6%; and
- USD 275 million paid in Embracer Group shares (together with the equity part of the Upfront payment, the “Consideration shares”), of which:
- 14,033,140 B shares of Embracer Group, equivalent of USD 113 million, issued at closing and vested 3 years after closing, conditional upon completion of certain projects
- 189,783 A shares and 13,719,168 B shares of Embracer Group, equivalent of USD 112 million, issued at closing and vested 6 years after closing, conditional upon completion of certain projects; and
- 6,209,354 A shares of Embracer Group, equivalent of USD 50 million issued at closing and vested 6 years after closing, conditional upon completion of certain projects, and the Sellers remaining employed by the Company 6 years post closing.
- The total consideration, assuming full earn-out, of USD 525 million is equivalent of approximately 8.4x Saber Interactive’s 2019 EBIT.
- The Consideration shares are issued at a price of SEK 78.4510 per share which equals the 40 day volume weighted average price of Embracer B shares on Nasdaq First North Growth Market up to and including 18 February 2020, and using the FX rate USD/SEK of 9.7426 per 18 February 2020.
- In addition, the Sellers will enter into agreements with Embracer Group which include a 20 year profit share of Saber Interactive’s business performance as part of Embracer Group. The profit share scheme incorporates 10% of Saber Interactive’s realised annual EBIT above USD 76 million, i.e. after 20 years the Sellers are entitled to receive a total amount equal to 10% of Saber Interactive’s accumulated EBIT that exceeds USD 1,520 million (20 years x USD 76 million).
- The Sellers will become the second largest shareholder block in Embracer Group after Lars Wingefors through companies and Erik Stenberg through companies with a joint holding of approximately 11% of the capital and 15% of the votes in Embracer Group, assuming full Earn-out payment and that all shares issued as part of the Earn-out payment have been vested.
- Closing of the Transaction is expected to take place during the second calendar quarter of 2020.
- To close the Transaction the board of directors of the Company has today resolved to summon an extra general meeting of the shareholders to authorize the board to issue the Consideration shares.
- Closing of the Transaction is conditional upon customary conditions including regulatory approvals such as merger control clearance.
- Following closing of the Transaction, the carved out part of the Saber Interactive business will continue to operate as a separate division within the Company. No restructuring or cost saving programmes are planned.
- Lars Wingefors and Erik Stenberg, together representing approximately 62% of the total votes in Embracer Group, have committed to vote in favour of the authorization to issue Consideration shares proposed for the extra general meeting. Lars Wingefors and Erik Stenberg have also committed to vote in favour of appointing Matthew Karch to Embracer Group’s board of directors following closing of the Transaction.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel dedicated to gaming Let's Plays and tutorials. You can contact the author at email@example.com or on Twitter @TrunksWD.