Embracer Group, a Swedish gaming giant, had a partner who walked away from a multi-billion dollar deal, reported to be a game company backed by the Saudi Arabian government. Read on to learn the known details of the deal.
Embracer Group's $2bn Deal Reportedly Dropped by Saudi-backed Savvy Games
Deal's Collapse Forced Embracer Group to Adopt Cost-Cutting Measures
The partner who walked away from a $2 billion deal with video game holding company Embracer Group was none other than Savvy Games - a gaming company funded by the Kingdom of Saudi Arabia. This is according to a report by American news outlet Axios, quoting four sources said to be familiar with the transaction.
The Embracer Group, a Swedish conglomerate that owns several well known game developers and publishers, including Gearbox Software, THQ Nordic, Deep Silver, and Coffee Stain Studios, announced the collapse of the deal back in May. Had the deal pushed through, Embracer said in a press release that it would’ve made $2 billion in "contracted development revenue" over six years.
Instead, news of the deal’s collapse sent Embracer shares dropping by 40 percent, prompting the company to announce cost-cutting measures effective in October.
Reason Why Savvy Games Walked Away From Embracer Deal Still Unclear
Sources quoted by the Axios report identified Savvy Games, which is fully owned by the Saudi Public Investment Fund (PIF), as the potential partner, but did not specify exactly why exactly the deal was broken off with Embracer. However, this may be just a bump in the road for the Kingdom of Saudi Arabia’s plan to invest around $38 billion into the video games industry as a whole, something it unveiled via a press release in September last year.
The plan, which is no longer on the Saudi Press Agency’s website but is still accessible via the Wayback Machine, says that 50 billion Saudi Riyals ($13 billion) would be used by Savvy Games "for the acquisition and development of a leading game publisher to become a strategic development partner."
Meanwhile, 70 billion ($18.6 billion) would be used to "make a series of minority stake investments in key companies that support Savvy’s game development agenda." The remaining 22 billion SAR ($5.8 billion) would be put toward video games in early development, esports companies, and "mature industry partners who add value and expertise to Savvy’s portfolio."
The plan coincides with Saudi Arabia’s Vision 2030 project, Crown Prince Mohammed bin Salman’s larger initiative to diversify the kingdom’s economy away from its current dependence on oil exports by the end of this decade.
Axios Report on Savvy Games-Embracer Group Deal
