Embracer Group Has Purchased Some Studios from Square Enix

Monday, May 2nd, 2022

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Today it was announced that the Embracer Group has purchased Crystal Dynamics, Eidos Montreal and Square Enix Montreal from Square Enix, The move will cost Embracer Group 300 million and see them gain some very notable IPs such as: Tomb Raider, Legacy of Kain, Deus EX, Thief and many more. Square Enix will still continue to publish such titles as Life is Strange, Just Cause and Outriders. 

Here is a statement from Square Enix on the deal:

SQUARE ENIX HOLDINGS CO., LTD. (the “Company”) today signed a share transfer agreement
with Sweden-based Embracer Group AB concerning the divestiture of select overseas studios and
IP (the “Transaction”). The Company’s primary assets to be divested in the Transaction are group
subsidiaries such as CRYSTAL DYNAMICS, INC.; EIDOS INTERACTIVE CORP. and IP such as
TOMB RAIDER, Deus Ex, Thief, and Legacy of Kain. At the Company Board of Directors meeting
held on 27 April, 2022, the Board resolved to entrust Representative Director Yosuke Matsuda with
the right of final decision. All conditions having being met, the share transfer agreement was
concluded today.

1. Purpose of the Transaction
The Transaction will assist the Company in adapting to the changes underway in the global
business environment by establishing a more efficient allocation of resources, which will enhance
corporate value by accelerating growth in the Company’s core businesses in the digital
entertainment domain. In addition, the Transaction enables the launch of new businesses by
moving forward with investments in fields including blockchain, AI, and the cloud. The move is
based on the policy of business structure optimization that the Company set forth under the
medium-term business strategy unveiled on May 13, 2021.

The Transaction will also provide an opportunity to better align our overseas publishing function
with our organization in Tokyo, revisit the current governance structure and associated reporting
lines, and advance integrated group management with the goal of maximizing the worldwide
revenue generated from future titles launched by the group’s studios in Japan and abroad.
Going forward, the Company’s development function will comprise its studios in Japan, Square Enix
External Studios, and Square Enix Collective. The Company’s overseas studios will continue to
publish franchises such as JUST CAUSE, OUTRIDERS, and Life is Strange.

Embracer Group had this to say:

Embracer Group AB (”Embracer”) has entered into an agreement to acquire the development studios Crystal Dynamics, Eidos-Montréal, Square Enix Montréal, and a catalogue of IPs including Tomb Raider, Deus Ex, Thief, Legacy of Kain and more than 50 back-catalogue games from SQUARE ENIX HOLDINGS CO., LTD. (“Square Enix Holdings”). In total, the acquisition includes ~1,100 employees across three studios and eight global locations. The total purchase price amounts to USD 300 million on a cash and debt free basis, to be paid in full at closing. Embracer has secured additional long-term debt funding commitments for this and other transactions in the pipeline. The company today reiterates its current Operational EBIT forecast for FY 21/22, FY 22/23, and FY 23/24. The transaction is subject to various regulatory and other external approvals and is expected to close during the second quarter of Embracer’s financial year 22/23 (July-September 2022).

Embracer will hold a webcast presentation for investors, analysts and media on 2 May 2022 at CET 09.00. Please find details in a separate invitation that will follow this release.

”We are thrilled to welcome these studios into the Embracer Group. We recognize the fantastic IP, world class creative talent, and track record of excellence that have been demonstrated time and again over the past decades. It has been a great pleasure meeting the leadership teams and discussing future plans for how they can realize their ambitions and become a great part of Embracer,” says Lars Wingefors, Co-founder and Group CEO, Embracer Group.

”Embracer is the best kept secret in gaming: a massive, decentralized collection of entrepreneurs whom we are thrilled to become a part of today. It is the perfect fit for our ambitions: make high-quality games, with great people, sustainably, and grow our existing franchises to their best versions ever. Embracer allows us to forge new partnerships across all media to maximize our franchises’ potential and live our dreams of making extraordinary entertainment,” says Phil Rogers, Square Enix America and Europe CEO.

It will be interesting to see how these classic IPs do with with new leadership at the reigns, and if Square Enix investing in very unpopular blockchain and NFT wares will pay off.

About Steve Baltimore

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