In May 2023, Embracer Group publicly announced the collapse of a major US $2 billion deal with a mystery partner. The deal had allegedly been drawn up, with all documentation finalised, before a ‘negative outcome’ resulted in a need for a financial rescope at the company.
‘The transaction had many of the highest rated global advisories onboard with several hundred people engaged on both sides,’ Embracer Group CEO Lars Wingefors said at the time. ‘All documentation was finalised and ready to go as of yesterday. We asked for the execution of the agreement before our Q4 announcement. However late last night we received a negative outcome from the counterparty.’
The loss of the ‘transformative’ deal was considered significant, and led to a drop in forecasted company profits, and a number of knock-on effects – including studio closures and game cancellations. Recently, it also contributed to the closure of studio Campfire Cabal.
Following months of speculation, Axios has now allegedly confirmed that Savvy Games was the mystery partner that pulled out of the Embracer Group deal. Notably, Savvy Games is backed by the Saudi government, via its Public Investment Fund (PIF), which seeks to provide funding for a range of global entertainment industries.
The PIF has been used to invest in a range of gaming companies, including Nintendo, Take-Two, and SNK. It’s also recently invested US $1 billion in Embracer Group. As Axios notes, while this support has been described as legitimate, many have raised concerns about the Saudi government supporting entertainment industries as a means to distract away from allegations of human rights abuses in the country.
The Axios report raises questions about why the alleged deal between Embracer and Savvy fell through, and whether the Saudi government will continue to invest in the global games industry in future – although, for now, any conclusions remain pure speculation.
While Axios has allegedly confirmed Savvy’s involvement with several sources, and after reviewing associated documents, neither Embracer nor Savvy was willing to comment publicly on the failed deal. In the wake of this collapse, Embracer Group is currently working on cost-cutting measures that have so far included layoffs, project cancellations, and business restructures.