Video game giant Embracer won’t have that name for much longer. As part of the company’s recent announcement that it’s splitting into three distinct companies, the Swedish giant also confirmed that the name Embracer is going away.
Current Embracer CEO Lars Wingefors told GI.biz that he will create a new holding company for which he will serve as the majority shareholder for all three companies. The name of this overarching company has not been confirmed yet, however, nor do we know when the name Embracer might go away for good.
Wingefors denied that he’s dumping the Embracer name to distance himself and the company in general from the controversy surrounding the outfit after its decision to lay off 1,400 people, cancel more than two-dozen games, and close studios.
“Not at all. These name changes are strategic decisions aimed at allowing each new entity to develop its own unique brand identity, tailored to its specific business focus and to maximize its potential in the market,” he said. Wingefors previously said he deserves criticism for what happened at Embracer.
Embracer is splitting into three companies: Asmodee Group, Coffee Stain and Friends, and Middle-earth Enterprises and Friends. For the latter two, these are only temporary names, with official titles to be revealed later.
Wingefors also clarified another key point of Embracer’s announcement, which was that it had lined up €900 million from a group of banks. That money is close to the amount of debt moving from Embracer to Asmodee. Embracer chose Asmodee to assign the debt to because the banks believed its business–tabletop games–are far more secure than video games.
“The banks love Asmodee; they know the company has been highly leveraged on their private equity ownership for more than a decade,” Wingefors said. “That amount is basically paying down the debt–not all, but most of the debt–in the remaining Embracer Group, meaning Coffee Stain & Friends and Middle-Earth & Friends. Basically, we are in a much better position from a balance sheet perspective today.”
Wingefors said the financial market in general does not enjoy the “volatility” of the AAA games space.
In February this year, Embracer disclosed that it canceled 29 unannounced games and laid off nearly 1,400 people in the previous six months as part of its previously announced restructuring effort.
Embracer made these drastic cuts in part due to a major deal falling through at the 11th hour, which has subsequently been revealed to be a pact with Saudi Arabia’s Savvy Games. Embracer previously took $1 billion from Saudi Arabia and defended that decision when people criticized Saudi Arabia’s position on human rights.