Embracer expects significant net sales and operational EBIT contribution once the new slate of AAA pipeline titles releases. Embracer’s base case financial plan implies that the combined acquired companies will be breakeven or have a smaller Operational EBIT contribution to the upcoming two financial years driven mainly by sales of the back-catalogue titles. This could change positively if the company decides to enter a deeper strategic relationship with one or more platforms around the upcoming pipeline. When the product pipeline matures in the years thereafter, Embracer expects the acquired companies to generate on average at least SEK 500 million in operational EBIT per year with notable upside potential. Further details around financials will be communicated at a later stage post-closing. Financing and current trading
Embracer has secured additional long-term debt funding commitments of SEK 4.0 billion and extended one existing loan of SEK 6.0 billion with our Nordic relationship banks Nordea, SEB, and Swedbank.
The additional bank funding commitment will finance our current M&A pipeline, including today’s transaction.
With the inclusion of the new facility, we estimate to have more than SEK 10.0 billion in available cash and credit facilities by today’s date.
We estimate current average net interest cost across the group is expected to be approximately 1.0% including the new facility.
Under the new terms, Embracer does not hold any short-term debt on the balance sheet. We do not have any debt that expires before 30 June 2023.
Embracer expects strong growth in free cash flow during FY22/23 and the years beyond. We remain committed to delivering on our financial leverage target. If net debt temporarily exceeds 1.0x net debt to operational EBIT on a forward 12 months basis, our intent is to return to below 1.0x net debt to operational EBIT over the medium term.
Current trading: The company today reiterates its current forecast (last dated February 17, 2022) of operational EBIT for FY21/22, FY22/23, and FY23/24.
Purchase price
The total purchase price amounts to USD 300 million on a cash and debt free basis, to be paid in full at closing.
Completion of the transaction
The transaction is subject to various regulatory and other external approvals. It is expected to be completed during the second quarter of Embracer’s financial year 22/23 (July-September 2022).
Advisors
Juno Capital Partners acted as M&A and strategic advisor to Embracer. Baker McKenzie acted as legal counsel. EY acted as financial and tax advisor.
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
Beatrice Forsgren, Head of Brand and Communication Embracer Group AB (publ)
Tel: + 46 704 52 57 63
-E-mail: beatrice.forsgren@embracer.com
About Embracer Group
Embracer Group is a parent company of businesses led by entrepreneurs in PC, console, mobile and board games and other related media. The Group has an extensive catalog of over 850 owned franchises.
With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its ten operative groups: THQ Nordic, Koch Media, Coffee Stain, Amplifier Game Invest, Saber Interactive, DECA Games, Gearbox Entertainment, Easybrain, Asmodee and Dark Horse. The Group has 119 internal game development studios and is engaging more than 12,500 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.
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[1]Eidos Montréal employee count excludes QA and IT personnel.
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