Square Enix held a meeting with investors to discuss the recent financial success. From this it became known that the publisher wants to sell shares in some of its studios in order to increase capital efficiency. After the meeting, the company’s shares rose more than 11%.
Japan-based analyst David Gibson said in a report that selling Crystal Dynamics and Eidos Montreal to Embracer Group is the first phase of Square Enix’s plans. The second involves diversifying the studios’ capital structure. Rising game development costs are forcing Square Enix to do so.
Additionally, the company said it was selling Crystal Dynamics and Eidos Montreal out of concern that those studios’ games would limit sales to the rest of the publisher. For this reason, Square Enix will also focus on Japanese games. And the analyst expects Sony Interactive Entertainment, Tencent and Nexon to be among those interested in buying stakes in front-line studios.
Gibson too written downthat’s Square Enix’s solution, according to him “extraordinary”, as the publisher needs to have more than enough cash to meet its needs without having to sell stakes in existing studios. After selling Crystal Dynamics and Eidos Montreal, the company will have $1.4 billion and no debt, enough to expand investment in games rather than sell stakes in other studios, the analyst said.
Upon completion of the acquisition of Crystal Dynamics and Eidos Montreal, Embracer Group will acquire rights to a large catalog of intellectual property including Tomb Raider, Deus Ex, Thief and Legacy of Kain.