STOCKHOLM, Nov. 18, 2020 /PRNewswire/ -- Embracer Group
AB ("Embracer") and its subsidiaries have as previously
communicated this morning entered into 13 acquisition agreements
(the "Acquisitions"). The acquired businesses are, during the
financial year ending 31 March 2022,
expected to contribute to Embracer Group's net sales in the range
of SEK 850-1,050 million and
contribute to operational EBIT in the range of SEK 300-400 million. In addition, during FY
2021/2022 the expanded studio footprint is expected to bring
savings on capitalized game development in the range of
SEK 50-100 million. The combined
operational EBIT and savings on game development are expected to be
in the range of SEK 350-500 million
and this profitability is expected to grow in the following years
as more game development projects will be completed.
The aggregated day one purchase price for the Acquisitions
amounts to approximately SEK 2.0
billion on a cash and debt free basis. Approximately
SEK 1.7 billion is paid in cash and
SEK 0.3 billion in newly issued
Embracer B shares with a maximum additional consideration amounting
to SEK 1.8 billion, which is subject
to fulfilment of agreed milestones, both operational and financial,
over a period of up to 10 years. The additional consideration
comprise a maximum of approximately SEK 0.9
billion which may be paid in cash and a maximum
approximately SEK 0.9 billion to be
paid in Embracer B shares at a price corresponding to the volume
weighted average price per Embracer B share at Nasdaq First North
Growth Market during 20 trading days up until and including the
date of signing of the Acquisitions (VWAP 20). The aggregated
maximum consideration amounts to SEK 3.8
billion.
The total number of shares that are issued as part of the
aggregate consideration, excluding shares issued as part of
earn-out structures, amounts to approximately 1,723,000 Embracer B
shares issued at a price of approximately SEK 174 per B share. The part of the additional
consideration consisting of Embracer B shares amounts to a maximum
of approximately 5,170,000 shares provided that all earn out
targets are met. Approximately 1,367,000
B shares being part of the additional consideration are
issued at closing of the Acquisitions and subject to such as claw
back rights and lock-up restrictions. A maximum of approximately
3,803,000 B shares may be issued in
the future as additional consideration subject to fulfillment of
certain targets. The share issues are made pursuant to the
authorization granted by the extra general meeting held on
16 November 2020.
The Acquisitions
All of Embracer's operating units - THQ Nordic, Deep Silver/Koch
Media, Coffee Stain, Amplifier Games Invest, Saber Interactive and
Deca Games - are making bolt-on
acquisitions. Embracer onboards more than 1,250 experienced and
talented people, strengthens its developer footprint in
Eastern Europe as well as its
development and UA capabilities within free-to-play. In most of the
transactions, earn-outs and management incentives over 5-10 years,
have been put in place to ensure long term alignment with the
founders and management teams joining Embracer.
The announced Acquisitions are aligned with Embracer's growth
strategy and is enabled by the group's decentralized operating
model. Over the past three years, Embracer has expanded from one to
six operating units. Each of these operating units have put in
place their own M&A agenda with the purpose of adding
additional organic growth opportunities and to improve long term
profit and cash flow generation. For Embracer's decentralized
operating model to be sustainable and scalable, it is a necessity
that most acquisitions are originated and onboarded on the
operating unit level. For the Embracer operating model with
emphasis on decentralized decision making and independence for
local management to work, it is also necessary that founders and
management of acquired companies join Embracer with a long-term
mindset.
Through the Acquisitions, Embracer Group grows to 58 internal
studios and more than 5,700 employees and contracted employees in
more than 45 countries.
Embracer's inhouse developer footprint is expanded by 767
developers, equivalent to a 30 percent increase and brings the
total number of internal developers to 3,318. The total headcounts
within the group increases to more than 5,700 employees and
contracted employees following the Acquisitions. The management
depth is further extended by the addition of strong business
leaders and local management teams with an impressive track record,
where many of the acquired companies are leading premium games
developers in their respective countries.
Deca Operating Unit will triple in size in terms of revenues
and employees
Embracer entered the free-to-play games segment with the
acquisition of Deca Games in
August 2020. Today, the Deca
Operating Unit is established with the addition of A Thinking Ape
and IUGO, two studios based in Canada. Embracer estimate the new Deca
Operating Unit will triple in size in terms of revenues and
employees and create a full scale free-to-play operation with
expertise across IP origination, game development, marketing, user
acquisition and live operations. Deca
Games, A Thinking Ape and IUGO will continue to operate as
independent companies within the Deca Operating Unit free-to-play
ecosystem with their respective management teams continuously
responsible for day-to-day operations. Founders and management
across these businesses have a long term alignment with Embracer
and shares a passion for creating a substantial free-to-play
business over time through a combination of organic growth and by
welcoming more FTP gaming entrepreneurs to the Embracer family.
Embracer Group's capital allocation strategy are essential
for continued growth
The capital allocation priorities for Embracer are unchanged.
The first priority for allocation of operational cash flow from
released games to reinvest as much as possible into value enhancing
organic growth opportunities, e.g. new game projects. The second
priority is to use free cash flow to finance, bolt-on acquisitions
in the operating units.
Embracer reiterates the ambition to maintain a strong balance
sheet and strives to maintain a net cash position to maintain
maximum strategic flexibility. For the right inorganic growth
opportunity, financial leverage could temporarily exceed 1,0x
operational EBIT to net debt, where operational EBIT is measured as
management expectations for the coming twelve months. In such
circumstances, leverage should at least return to below 1,0x net
debt to operational EBIT over the medium term, either by retaining
cash from operations or by raising primary capital in the equity
market.
Cash at hand and available credit facilities post the cash
payment of the Acquisitions amounts to more than SEK 8.5 billion. Furthermore, on 16 November 2020, the extra general meeting
authorized the board of directors to issue B shares in the amount
not exceeding ten (10) percent of the total number of shares in the
Company at the time when the authorization is used the first time
to fund acquisitions, parts of this mandate has been used according
to the Acquisitions. The ambition is to continue to partly fund
acquisitions with equity to create long term alignment with
founders and management joining Embracer.
The shares and dilution
Through the Acquisitions, Embracer may in aggregate issue,
including earn-out consideration shares, a total of approximately
6,893,000 shares, meaning that the number of shares in Embracer can
increase from 421,139,665 to approximately 428,032,665 B shares, and that the number of
votes can increase from 721,731,898 to approximately
728,624,898.
The total number of shares that are issued as part of the
aggregate consideration, excluding shares issued as part of
earn-out structures, are issued at a price of approximately
SEK 174 per B share.
The part of the additional consideration for the Acquisitions
consisting of Embracer B shares amounts to a maximum of
approximately 5,170,000 shares provided that all earn out targets
are met. Approximately 1,367,000 B
shares being part of the additional consideration are issued at
closing of the Acquisitions and subject to such as claw back rights
and lock-up restrictions. A maximum of approximately 3,803,000 B shares may be issued in the future as
additional consideration subject to fulfillment of certain targets.
All earn-out shares are issued at a price of approximately
SEK 174 per B share.
The Acquisitions will, if all earn-out consideration shares are
issued, lead to a dilution of approximately 1.61 percent of the
share capital and approximately 0.95 percent of the votes in
Embracer based on the number of shares and votes in Embracer
following completion of the Acquisitions and issuance of all
earn-out consideration shares.
All shares issued as part of the consideration for the
Acquisitions, excluding the earn-out consideration shares, are
issued based on the authorization from the extra general meeting on
16 November 2020.
Advisers
Ernst & Young AB is providing transaction support and Baker
McKenzie is acting as legal counsel to Embracer in connection with
the Acquisitions.
Responsible party
This information constitutes inside information that Embracer
Group AB is obliged to make public in accordance with the (EU)
Market Abuse Regulation 596/2014. The information in this press
release has been made public through the agency of the responsible
person set out below for publication at the time stated by Embracer
Group's news distributor Cision at the publication of this press
release. The responsible person below may be contacted for further
information.
For additional information, please contact:
Lars Wingefors, Co-founder and Group CEO Embracer Group AB
Tel: +46 708 47 19 78
E-mail: lars.wingefors@embracer.com
About Embracer Group
Embracer Group is the parent company of businesses developing
and publishing PC, console and mobile games for the global games
market. Embracer Group has an extensive catalogue of over 190 owned
franchises, such as Saints Row, Goat Simulator, Dead Island,
Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters,
Satisfactory, Wreckfest, Insurgency and World War Z, amongst many
others.
With its head office based in Karlstad, Sweden, Embracer Group has a global presence
through its six operative groups: THQ Nordic GmbH, Koch Media
GmbH/Deep Silver, Coffee Stain AB, Amplifier Game Invest, Saber
Interactive and DECA Games. Embracer Group has 46 internal game
development studios and is engaging more than 4,000 employees and
contracted employees in more than 40 countries.
Embracer Group's shares are publicly listed on Nasdaq First
North Growth Market Stockholm under the ticker EMBRAC B with FNCA
Sweden AB as its Certified Adviser; info@fnca.se +46-8-528 00
399.
Subscribe to press releases and financial information:
https://embracer.com/investors/subscription/
For more information, please visit: http://www.embracer.com
Important information
The release, announcement or distribution of this press release
may, in certain jurisdictions, be subject to restrictions. The
recipients of this press release in jurisdictions where this press
release has been published or distributed shall inform themselves
of and follow such restrictions. The recipient of this press
release is responsible for using this press release, and the
information contained herein, in accordance with applicable rules
in each jurisdiction. This press release does not constitute an
offer, or a solicitation of any offer, to buy or subscribe for any
securities in Embracer Group in any jurisdiction, neither from
Embracer Group nor from someone else.
This announcement does not identify or suggest, or purport to
identify or suggest, the risks (direct or indirect) that may be
associated with an investment in Embracer's shares. Any investment
decision regarding Embracer's shares must be made on the basis of
all publicly available information relating to the company and the
company's shares. The information contained in this announcement is
for background purposes only and does not purport to be full or
complete. No reliance may be placed for any purpose on the
information contained in this announcement or its accuracy or
completeness. This announcement does not constitute a
recommendation. Each investor or prospective investor should
conduct his, her or its own investigation, analysis and evaluation
of the business and data described in this announcement and
publicly available information. The price and value of securities
can go down as well as up. Past performance is not a guide to
future performance.
Forward-looking statements
This press release contains forward-looking statements that
reflect the company's intentions, beliefs, or current expectations
about and targets for the company's future results of operations,
financial condition, liquidity, performance, prospects, anticipated
growth, strategies and opportunities and the markets in which the
company operates. Forward-looking statements are statements that
are not historical facts and may be identified by words such as
"believe", "expect", "anticipate", "intend", "may", "plan",
"estimate", "will", "should", "could", "aim" or "might", or, in
each case, their negative, or similar expressions. The
forward-looking statements in this press release are based upon
various assumptions, many of which are based, in turn, upon further
assumptions. Although the company believes that the expectations
reflected in these forward-looking statements are reasonable, it
can give no assurances that they will materialize or prove to be
correct. Because these statements are based on assumptions or
estimates and are subject to risks and uncertainties, the actual
results or outcome could differ materially from those set out in
the forward-looking statements as a result of many factors. Such
risks, uncertainties, contingencies and other important factors
could cause actual events to differ materially from the
expectations expressed or implied in this release by such
forward-looking statements. Embracer does not guarantee that the
assumptions underlying the forward-looking statements in this press
release are free from errors and readers of this press release
should not place undue reliance on the forward-looking statements
in this press release. The information, opinions and
forward-looking statements that are expressly or implicitly
contained herein speak only as of its date and are subject to
change without notice. Neither the Embracer nor anyone else
undertake to review, update, confirm or to release publicly any
revisions to any forward-looking statements to reflect events that
occur or circumstances that arise in relation to the content of
this press release, unless it is not required by law or Nasdaq
First North Growth Market's rule book for issuers.
This information was brought to you by Cision
http://news.cision.com
https://news.cision.com/embracer-group-ab/r/estimated-net-sales-of-sek-850-1-050-million-and-sek-300-400-million-in-operational-ebit-added-durin,c3239076
The following files are available for download:
https://mb.cision.com/Main/15049/3239076/1336520.pdf
|
Estimated net
sales
|
View original
content:http://www.prnewswire.com/news-releases/estimated-net-sales-of-sek-850-1-050-million-and-sek-300-400-million-in-operational-ebit-added-during-fy-20212022--301175610.html
SOURCE Embracer Group AB