20 May (Reuters) – Embracer said on Wednesday it is planning a spin-off of two listed companies, after the Swedish video games group’s quarterly operating profit exceeded analysts’ expectations.
Owner of the Tomb Raider franchise, the company said it planned to spin off Fellowship Entertainment into a new company, with a listing on Nasdaq Stockholm in 2027.
The gaming sector has been rethinking its business models and focusing more on intellectual property (IP) since the strong growth previously driven by the pandemic slowed.
Study abroad
Upgrade your career!
Fellowship will be an “IP-based entertainment company” focused on development, publishing and licensing, Embracer said. Licensing, based at Middle Earth Enterprises, will be ‘the heart’ of the business, chief executive Phil Rogers told Reuters.
Embracer, in turn, will position itself as a simplified home for creators, with stricter cost control and a focus on profits and selective agreements, to increase shareholder returns.
“The main justification for the Fellowship spin-off is to increase management’s focus on capturing the full potential of the IPs, their respective communities and some of the best game developers in the world,” Embracer chairman and largest shareholder Lars Wingefors said in a letter to shareholders.
Continues after advertising
The Fellowship will house the group’s biggest IPs, including The Lord of the Rings, Tomb Raider and Kingdom Come: Deliverance. Embracer will focus on niches such as retro gaming and physical game distribution.
Rogers, Embracer Chief Financial Officer Müge Bouillon and Chief Operating Officer Lee Guinchard will assume the same roles at the Fellowship. Bouillon was also appointed deputy chief executive of Embracer Group until the split. In addition, Embracer has begun recruiting a new chief executive and chief financial officer.
The company reported adjusted earnings before interest and taxes of 360 million SEK ($38.3 million) in the fiscal fourth quarter, nearly 100 million SEK above analyst consensus. It also announced a share buyback program of up to SEK 750 million.
