Gearbox merges with Embracer Group for up to $1.4bn – Gearbox and 2K to continue relationship

The Embracer group hug just keeps on getting bigger. Today the group announced that it was merging with Gearbox Entertainment. With CEO Randy Pitchford and Gearbox employees will jointly become a “significant shareholder” in Embracer.

The purchase price totals to $363m, of which $175m is being paid in newly issued shares. However with adds-on based on targets over the next six years the total could reach $1.378bn. Although that depends on a similar amount being earned by the company over that period.

Embracer notes what attracted it to the company. With “critically acclaimed and iconic franchises” being the most eye-catching entry, notably Borderlands, Brothers in Arms and Homeworld. It’s the first that is undoubtedly the crowning achievement of the developer.

[UPDATE] The initial announcement threw into uncertain the ongoing relationship between Gearbox, owner of the Borderlands franchise, and its long-term publishing partner 2K. This was quickly clarified though by a statement from 2K.

“As the proud publisher of the Borderlands franchise, we are happy for our partners at Gearbox and this exciting new chapter for their organization. The merger does not change 2K’s relationship with Gearbox nor our role as the publisher for the Borderlands IP or any other projects we are currently working on with the studio. We look forward to continuing our long-term partnership with this incredibly talented team and delivering many more exciting entertainment experiences to gaming fans around the world.”

And Randy Pitchford backed that up with in response to a query from VGC on a conference call. “There are things that we are very good at and there are things that other people are better at than us… If we’re thinking specifically about Borderlands, we love our relationship with Take-Two and the 2K Games label and we are committed to working together through all of the known and planned Borderlands work that we have going on.”

The move gives the group its first big US-based operating group, including a major development studio and the growing publishing operation, which to date is best known for We Happy Few (a deal arranged before Compulsion was bought by Microsoft) and PS5 launch exclusive Godfall (from Counterplay Games).

Pitchford was clear that the sense of independence within a larger organisation was what attracted him to the Embracer deal.

“Lars’s vision of Embracer as an allied partner group committed to fueling and accelerating the ambitions of a series of decentralized, successful entrepreneurial member companies while magnifying the collective value and advantages of diversification across the entire group is the most brilliant strategy and design for short, medium, and long-term success in this industry that I have worked in during 30 years. The feeling at Gearbox is that we are just getting started and this transaction is not merely a stimulant for the talent of our employee-owned company, but a propellent for the exciting future we have planned.”

While Lars Wingefors, Founder and Group CEO of Embracer Group added: “Gearbox is arguably one of the most creative and valuable independent developers in the world. We believe that the resources offered by Embracer will position Gearbox for continued significant growth in the years to come.”