UPDATED: Embracer Continues Offloading, Now Selling Borderlands Creator Gearbox To Take-Two for $460 Million

The rumors were true! Gearbox, developers of Borderlands and Tiny Tina's Wonderlands, is being sold to Rockstar' s parent company, Take-Two. The sale is expected to complete later this year, around June, and will net the Embracer Group about $460 million, a consideration made up of all newly-issued stock.

The deal makes a great deal of sense in both directions as Take-Two already had the Borderlands publishing rights.

This isn't a surprise. Almost all of the Embracer group pieces we've posted this past year are all reporting on layoffs or sales following the collapse of a potential $2 billion deal for the company back in May 2023.

Interestingly, the sale isn't ALL of Gearbox. Apparently, Take-Two opted to let Embracer Group keep Gearbox Publishing San Francisco, the division in charge of publishing the Remnant titles and Hyper Light Breaker. This division will be renamed soon.

Embracer also retains Cryptic Studios and the MMOs under them (transferring to DECA) like Neverwinter and Star Trek Online.

The sale probably feels great for Randy Pitchford (who will remain CEO of Gearbox) and the team as Take-Two probably provides a bit more stability than the flagging Embracer Group currently offers. "Joining forces with Take-Two Interactive and 2K will help Gearbox ascend to our next level. Take-Two and 2K have demonstrated repeatedly their commitment to our engine of generating creativity, happiness, and profit," said Pitchford.

We're incredibly proud to announce we're joining the Take-Two Interactive/@2K family. pic.twitter.com/ot1gJK4TUp

— GearboxOfficial (@GearboxOfficial) March 28, 2024

Chairman and CEO of Take-Two Strauss Zelnick had this to say, "Our acquisition of Gearbox is an exciting moment for Take-Two and will strengthen our industry-leading creative talent and portfolio of owned intellectual property, including the iconic Borderlands franchise."

Initially, this would appear to be a large loss for Embracer with initial reports saying they bought Gearbox for $1.3 billion. It should be taken into consideration though that the $1.3 billion price tag required certain performance and sales targets to be met by Gearbox over the 6 years after Embracer purchased the company. There has yet to be a release of data on how many of those targets were met.

Embracer picking up stock in Take-Two could also mean that if the Take-Two stock price rises (like, say, for example, if they launched a new GTA title), Embracer's stock holdings become more valuable than the current $460 million price they're worth.

Did Embracer sell Gearbox at a loss? Probably, but without knowing the exact EBITDA numbers from Gearbox over the last 4.5 years, it's hard to say how much of a loss. If Embracer hangs on to the Take-Two stock and the stock rises then that loss gap gets even smaller...if Embracer is around long enough at this point.

UPDATE 3/29/2024: CEO of Embracer, Lars Wingefors, said during an investor call regarding the sale of Gearbox that this sale marked the end of Embracer Groups' planned restructuring. Wingefors, in response to a question, also said that it was too early to start talking about acquiring studios again and that the properties sold had negative cashflow and that's why they were sold. Embracer needs to be "cashflow generative."