4 ms·

I don't know anything about the debt/risk etc.. around this, but $300M seems very, very low for 3 studios with lots of IP.

by awill 4y ago

sorry_outta_gas 4y ago
The 300M received will 100x itself in the cryptospace though, must look to the future not the now. according to square's leadership anyway
- overboard2 4y ago
  How is that relevant?
  - sorry_outta_gas 4y ago
    "In addition, the Transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud," Square Enix said.
    - deathanatos 4y ago
      You're not going to underprice a sale because of that. Even if you believed that you could take the money and "100x itself in the cryptospace"", why not 100x $500M, instead of 100x $300M? (Unless you disagree with the parent's point, that is, and think that that is a fair price for what was sold. I'm not commenting on that, only that "investing the proceeds in crypto" doesn't make sense in this argument.)
  - deleted 4y ago
    [deleted]
  - phoboslab 4y ago
    > Square Enix says the transaction (which was only $300 million) "enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud." ~ https://twitter.com/Wario64/status/1521017861803704321 https://twitter.com/Wario64/status/1521017861803704321
- deleted 4y ago
  [deleted]
WillPostForFood 4y ago
You’d think Tomb Raider alone would be worth something like that amount, though maybe it did make up most of the value.
- tyrfing 4y ago
  It definitely does. > [T]wo original IPs, Tomb Raider and Deus Ex, have sold AAA units of ~88M and ~12M, respectively. Embracer sees an opportunity to invest in these franchises, as well as the additional acquired IPs such as Legacy of Kain, Thief, and other original franchises. It's pretty much Tomb Raider, Deus Ex, and footnotes. Looks like Embracer picked this up for cheap because the business has been mismanaged, the base case involves running at breakeven for at least 2 years before they have new releases: > Embracer’s base case financial plan implies that the combined acquired companies will be breakeven or have a smaller Operational EBIT contribution to the upcoming two financial years driven mainly by sales of the back-catalogue titles. This could change positively if the company decides to enter a deeper strategic relationship with one or more platforms around the upcoming pipeline. When the product pipeline matures in the years thereafter, Embracer expects the acquired companies to generate on average at least SEK 500 million in operational EBIT per year with notable upside potential. So 6X multiplier a few years out if they turn it around. Notably, they're financing this at 1% interest, and seem to have extremely low debt ratios. Still, I'm surprised it was this cheap, especially with the gaming IP land grab going on these days. Makes me wonder if there's weird additional commitments like not firing anyone, or if their recent financial performance is much worse than implied. https://embracer.com/release/embracer-group-enters-into-an-agreement-to-acquire-eidos-crystal-dynamics-and-square-enix-montreal-amongst-other-assets/ https://embracer.com/release/embracer-group-enters-into-an-a...
metalliqaz 4y ago
They have been mismanaged badly and have lost LOTS of money on recent flops. I'll bet the new owners intend to completely write-off substantial chunks of the in-progress work and start clean.

I don't know anything about the debt/risk etc.. around this, but $300M seems very, very low for 3 studios with lots of IP.

by awill 4y ago

I don't know anything about the debt/risk etc.. around this, but $300M seems very, very low for 3 studios with lots of IP.

sorry_outta_gas 4y ago

The 300M received will 100x itself in the cryptospace though, must look to the future not the now. according to square's leadership anyway

overboard2 4y ago
How is that relevant?
- sorry_outta_gas 4y ago
  "In addition, the Transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud," Square Enix said.
  - deathanatos 4y ago
    You're not going to underprice a sale because of that. Even if you believed that you could take the money and "100x itself in the cryptospace"", why not 100x $500M, instead of 100x $300M? (Unless you disagree with the parent's point, that is, and think that that is a fair price for what was sold. I'm not commenting on that, only that "investing the proceeds in crypto" doesn't make sense in this argument.)
- deleted 4y ago
  [deleted]
- phoboslab 4y ago
  > Square Enix says the transaction (which was only $300 million) "enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud." ~ https://twitter.com/Wario64/status/1521017861803704321 https://twitter.com/Wario64/status/1521017861803704321
deleted 4y ago
[deleted]

WillPostForFood 4y ago

You’d think Tomb Raider alone would be worth something like that amount, though maybe it did make up most of the value.

tyrfing 4y ago
It definitely does. > [T]wo original IPs, Tomb Raider and Deus Ex, have sold AAA units of ~88M and ~12M, respectively. Embracer sees an opportunity to invest in these franchises, as well as the additional acquired IPs such as Legacy of Kain, Thief, and other original franchises. It's pretty much Tomb Raider, Deus Ex, and footnotes. Looks like Embracer picked this up for cheap because the business has been mismanaged, the base case involves running at breakeven for at least 2 years before they have new releases: > Embracer’s base case financial plan implies that the combined acquired companies will be breakeven or have a smaller Operational EBIT contribution to the upcoming two financial years driven mainly by sales of the back-catalogue titles. This could change positively if the company decides to enter a deeper strategic relationship with one or more platforms around the upcoming pipeline. When the product pipeline matures in the years thereafter, Embracer expects the acquired companies to generate on average at least SEK 500 million in operational EBIT per year with notable upside potential. So 6X multiplier a few years out if they turn it around. Notably, they're financing this at 1% interest, and seem to have extremely low debt ratios. Still, I'm surprised it was this cheap, especially with the gaming IP land grab going on these days. Makes me wonder if there's weird additional commitments like not firing anyone, or if their recent financial performance is much worse than implied. https://embracer.com/release/embracer-group-enters-into-an-agreement-to-acquire-eidos-crystal-dynamics-and-square-enix-montreal-amongst-other-assets/ https://embracer.com/release/embracer-group-enters-into-an-a...

metalliqaz 4y ago

They have been mismanaged badly and have lost LOTS of money on recent flops. I'll bet the new owners intend to completely write-off substantial chunks of the in-progress work and start clean.