Swedish Embracer Group has been faced with an unexpected rejection of a $2 billion deal by esports company Savvy Games Group, part of Saudi Arabia’s Sovereign Investment Fund (PIF). This move could be the key to further expanding Embracer’s gaming ambitions.
Embracer Group, which is actively involved in acquisitions in the gaming industry, has encountered an unexpected obstacle on its way. In May, Savvy Games Group, which is led by Crown Prince Mohammed bin Salman and is essentially Saudi Arabia’s investment vehicle in the gaming industry, pulled out of a $2 billion deal. This was a stumbling block for Embracer who wanted to expand their influence in the gaming industry.
After the deal fell through, Embracer Group announced a reorganization that would involve closing or selling some studios and ceasing development on a number of games. According to the company, this process will end on October 1, and first steps in this direction have already been taken.
Before the deal fell through, it was reported that Savvy Games Group had already invested $1 billion in Embracer Group. The investment helped the Swedish holding acquire assets such as physical games publisher Limited Run Games, the rights to adaptations (including video games) of The Lord of the Rings and The Hobbit, and popular game brands such as Tomb Raider and Deus Ex.
Lars Wingefors, CEO of Embracer Group, said in 2022 that the company’s values remain unchanged despite criticism of working with Saudi investors due to human rights abuses in the country. At the same time, Embracer did not disclose the identity of its partner in the failed deal.
Details on the reasons why the deal between Embracer Group and Savvy Games Group didn’t go through are still unknown. However, it becomes clear that the main goal of this collaboration was to make Savvy Games Group one of the leading players in the global gaming scene. It is worth noting that Savvy Games Group, which acts as a vehicle for a Saudi investment fund, has already proven to be an active investor, investing in such well-known companies as Nintendo, Take-Two Interactive and Capcom.
The failure of the deal between Embracer Group and Savvy Games Group was an unexpected turn in the gaming industry. This event highlights the complexity and unpredictability of the global video game market, where huge deals can fail due to a variety of factors. At the same time, the activity of the Saudi investment fund shows the Middle East’s growing interest in the global gambling industry.