Gearbox Entertainment has been formally unloaded by Embracer Group, which paid $460 million to Take-Two Interactive for the subsidiary. The last major transaction in the video game industry, Gearbox Entertainment, the firm behind the Borderlands franchise, was purchased by video game publisher Take-Two Interactive Software for $460 million in an all-stock agreement with Embracer.
Gearbox Software, Gearbox Montreal, Gearbox Studio Quebec, and the Borderlands, Tiny Tina’s Wonderlands, Homeworld, Risk of Rain, Brothers in Arms, and Duke Nukem properties are being divested, according to a press statement from Embracer. The rights to Cryptic Studios, Lost Boys Interactive, Captured Dimensions, Hyper Light Breaker, Remnant, and other undisclosed titles will remain with Embracer, as will the publishing rights to Gearbox Publishing San Francisco (previously Perfect World Entertainment, which it wants to rebrand). Its remaining assets will all be incorporated into other divisions of Embracer Group. It’s anticipated that the deal will conclude by the end of June.
CEO and creator Randy Pitchford will remain in charge of Gearbox when it becomes a part of Take-Two’s 2K arm. The company Gearbox is now working on “at least one exciting new intellectual property,” according to a second press release, in addition to a new Borderlands and Homeworld game.
Take-Two Pays $460 Million in Stock for Gearbox, Embracer Continues Studio Restructuring
It is noteworthy that Take-Two shares, not cash, will be used to cover the whole $460 million acquisition price payable to Embracer Group. By way of contrast, Gearbox was first acquired by Embracer for $363 million, of which half was paid in cash and the other half in freshly issued shares of Embracer Group. In addition, $1.015 billion in consideration also partially in shares was agreed to be paid out if Gearbox met specific goals within Six Years.
Take-Two publishes the Borderlands franchise under its 2K label, and the two companies have a long-standing partnership with Gearbox. Moreover, the two are working together on Gearbox’s 2016 game Battleborn and an anticipated Borderlands movie. With a multi-year purchase frenzy coming to an end last year, Embracer Group has been progressively selling off a number of its many, many studios. It most recently sold off Saber Interactive, and since then, it has made several changes, including suspending Volition, the company that developed Saints Row, canceling an unexpected Deus Ex game, and laying off over 900 employees, with more to come.
Take-Two Acquires Gearbox for Undisclosed Sum
Gearbox maintains studios in Quebec City, Montreal, and Frisco, Texas. Deal activity has been high in this market, starting with Microsoft’s massive $69 billion acquisition of the company last autumn. The acquisition price will be divided by Take-average Two’s closing share price during the five trading days leading up to the deal’s closure, which is expected to occur in the September quarter, to determine the quantity of Take-two shares involved in the transaction.
Certain publications from third parties and other assets that Take-Two determined to be non-core to its business are not included in the purchase. At the time of acquisition closure, the purchase price is based on the assumption that the business is debt-free and cash-positive, with a normalized level of net working capital (excluding cash).
