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Swedish gaming group Embracer to split into three listed companies

Published 22/04/2024, 06:10
© Reuters.

By Anna Ringstrom and Jesus Calero

STOCKHOLM (Reuters) -Swedish gaming group Embracer plans to split into three separate listed companies, and has secured new financing to cut debt, the owner of the Tomb Raider franchise said on Monday, boosting its shares.

Hit by development delays, weak demand, bad reception for some new games, and the collapse last year of a planned strategic partnership, Embracer's share price has fallen some 80% from its 2021 peak.

The stock was up 18% at 0815 GMT, on track for its biggest daily rise in more than four years, as analysts said the break up could create more value for shareholders and ease short-term debt pressures.

Embracer, which in February warned it may miss its debt reduction target, said the three new companies would be called Asmodee Group, Coffee Stain & Friends, and Middle-earth Enterprises & Friends.

It said in a statement that the current listed Embracer Group would be renamed Middle-earth Enterprises & Friends, and would retain the Tomb Raider franchise.

It plans to list Asmodee, a company it bought in 2022, within 12 months, and to list Coffee Stain & Friends in 2025.

"The intention of the board of directors of Embracer Group is to carry out both spinoffs by way of a dividend distribution of all shares," it said, adding that owners holding more than 50% of capital and votes had expressed support for the plan.

As part of the separation process, Embracer has, through Asmodee Group, secured a 900 million euros ($959 million)financing agreement to repay its existing debt.

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"Asmodee could carry a lot more debt than a more volatile AAA games business could. This new structure enables the businesses to create the most shareholder value," Embracer CEO Lars Wingefors told Reuters.

The proceeds would partly be used to repay debt in the remaining Embracer Group, it added.

Barclays (LON:BARC) said that splitting Embracer in three maintained the integrity of the assets, while the revised debt scheme offered short-term relief.

"While this was unexpected, we view the announcement positively as it could result in an improved valuation," said Redeye analyst Hjalmar Ahlberg in a note.

($1 = 0.9384 euros)

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