Embracer shares plummets after huge partnership falls through

The deal was said to have "set a new benchmark for the gaming industry."

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For many years, it seemed like Embracer Group (owner of Borderlands, Tomb Raider and The Lord of the Rings, among others) made a new spectacular acquisition every month while vacuuming the gaming market of both classic game series and game companies (both developers and publishers). Recently, however, it has been much calmer and during 2023 the share price has been more like a steep slalom slope - and today it has been a sheer cliff.

The problem is that the company now confirms that it missed a deal worth $2 billion during the night. Embracer writes in a statement:

"We have been working on one groundbreaking strategic partnership agreement that would have set a new benchmark for the gaming industry.

Negotiations have been taking far longer than originally anticipated considering we had a verbal commitment already in October 2022. The specific deal included more than USD 2 billion in contracted development revenue over a period of six years."

They go on to explain what happened next during the night:

"All documentation was finalized and ready to go as of yesterday. We asked for the execution of the agreement before our Q4 announcement. However late last night we received a negative outcome from the counterparty. This decision was unexpected to the management and the Board of Directors of Embracer."

As a result of this and significantly downgraded results, the share price has now fallen by over 45% at the time of writing. A rebound can possibly be expected tomorrow, but it is clear that the Swedish giant will have a tougher year ahead of it.

Embracer shares plummets after huge partnership falls through

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