Asmodee Owner To Split Into 3 Companies

Embracer Group, the Swedish gaming conglomerate which owns Asmodee, a major French tabletop gaming company with names like Days of Wonder, Ticket to Ride, Fantasy Flight Games, and various Lord of the Rings games--along with and Dark Horse Comics, Edge Studios, a subsidiary which produces the current range of Star Wars TTRPG books, and Fantasy Flight Games--is to split into three companies, the company has announced. Embracer Group owns or controls over 9,000 different IPs, including Middle Earth Enterprises, which it acquired in August 2022.

The company has been going through a rough time, with hundreds of layoffs, the closures of various studios like Saints Row developer Volition and Timesplitters' Free Radical Design, and the sales of developers such as Saber Interactive, which made the Star Wars: Knights of the Old Republic remake, and Gearbox Entertainment, which makes Borderlands and Duke Nukem. Restructuring began in June 2022, with 1,387 staff laid off, represents 8% of the company's worldwide workforce. 29 unannounced games were also cancelled, as was a new Deus Ex game. The financial turmoil was caused by the breakdown of a $2B deal with Savvy Games Group, a Saudi government funded company.

“The Board of Directors of Embracer Group AB (“Embracer Group”) today announces a transformative step for value creation through a separation of the group into three market-leading games and entertainment companies: Asmodee Group, “Coffee Stain & Friends” and “Middle-earth Enterprises & Friends”. The three entities will be separate, publicly listed companies, enabling each entity to better focus on their respective core strategies and offer more differentiated and distinct equity stories for existing and new shareholders. This will enable the entities to unlock value in the high-quality assets of Embracer Group following the successful completion of the restructuring program.”

The three new companies are:

• Asmodee (tabletop gaming)
• Coffee Stain & Friends (premium and free-to-play PC, console, and mobile gaming)
• Middle-earth Enterprises & Friends (AAA games, LotR content, plus Dark Horse Comics and Tomb Raider)

As part of the restructuring, Asmodee has secured €900M in financing, which most are speculating is a way to spin off Embracer's debts of over $700M--the press release says that "The loan is ringfenced with no recourse to Embracer Group… it is only secured by Asmodee assets". All three companies will remain controlled by Embracer CEO Lard Wingefors, who owns about 20% of Embracer's capital and controls 40% of votes. Embracer says that "Wingefors will “remain a long-term, active, committed and supportive owner of all three entities."

Edge Studios, which holds the TTRPG titles previously produced by sister-sute Fantasy Flight Games, is known for TTRPGs such as Arkham Horror, Legend of the Five Rings, Midnight, and Star Wars (along with the Genesys universal game system). These titles will be produced by the new Asmodee company.

Asmodee will be spun off within the next 12 months, with Coffee Stain moving during 2025. Asmodee in its current form, which Embracer acquired in March 2022, produces over 300 well-known tabletop games such as Ticket to Ride, Catan, and Exploding Kittens, with licensed tabletop games based on Lord of the Rings, Marvel, Lego, and Star Wars in development.

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Embracer Group AB (”Embracer Group”) has, as part of its decision to transform the group into three separate publicly listed entities, which is further described in a separate press release announced today, entered through Asmodee into a financing agreement with JP Morgan, BNP Paribas, SEB, Societe Generale and Swedbank. The financing amounts to EUR 900 million (approximately SEK 10.5 billion) with a maturity up to 18 months and on similar terms as the previous loan. The financing agreement creates a strong foundation for building an optimal capital structure for the three entities.

The financing is an important part of the debt refinancing of Embracer Group following its restructuring program, which was finalized 31 March, 2024. The loan at Asmodee level has a maturity up to 18 months on similar terms as Embracer Group’s existing SEK 8 billion loan with maturity in February 2025. The loan is ringfenced with no recourse to Embracer Group, separating Asmodee’s assets and funds from those of Embracer Group, and it is only secured by Asmodee assets. The loan will be used to refinance Embracer Group’s existing SEK 8 billion loan with maturity in February 2025, and to reduce the revolving credit facilities by SEK 1 billion to SEK 8 billion. The previously communicated mandatory amortization of SEK 2.6 billion until January 2025 is no longer needed due to the repayment of the SEK 8 billion loan with maturity February 2025. The existing revolving credit facilities mature in May 2025.

The intention is to continue to deleverage, through both the expected significantly improved Free Cash Flow in the remaining Embracer Group (excluding Asmodee), as well as the proceeds from the divested assets of Saber Interactive and Gearbox Entertainment in the course of FY24/25.

On a pro forma basis as per LTM[1] December 2023, Embracer Group, including the expected sales proceeds from the divestment of assets from Saber Interactive and Gearbox Entertainment, but excluding Asmodee, will have a Net Debt-to-Adjusted EBIT of around 0.6x. On a pro forma basis as per LTM December 2023, Asmodee will have a Net Debt to Adjusted EBITDA of approximately 3.9x. As part of the transformation and ahead of each separation the full capital structure, including both equity and debt, will be reviewed in Asmodee and “Coffee Stain & Friends” to create the best possible long-term foundation for each entity as a separately listed company.

 

[Wofano Wotanto]

There was an idea floated around for a while about how we could attract the young bright minds looking into business degrees towards STEM. It seems we overestimate (repeatedly, I might add) the IQs running Wall Street.

Intelligence questions aside, STEM disciplines already have more than enough issues with ethical failures. Given how capitalism works, expecting potential MBAs to somehow reduce the amount of plagiarism, fraudulent results, manipulated statistics and other bad practices seems...unwise.

 

[Wofano Wotanto]

Dark Horse is actually going off with the Middle-Earth Enterprises & Friends group. But Edge, Fantasy Flight, Catan Studio, Days of Wonder, and all the other tabletop studios they've acquired are all in that boat.

Yes, Dark Horse is probably safer than the gaming lines - but you still have to wonder if it's just a matter of being in a slightly less leaky lifeboat when the sharks close in.

 

[MacDhomnuill]

Some body call who ever owns WEG D6 theses days and tell them the Starwars license is going to be available soon…

 

[LuisCarlos17f]

If you were Hasbro, and you had survived a bad economic year, and now there is enough money, what would you do with Asmodee?

 

[mamba]

If you were Hasbro, and you had survived a bad economic year, and now there is enough money, what would you do with Asmodee?

there isn’t enough money, Asmodee is not for sale… even if neither were true, I’d still not buy them

 

[DarkCrisis]

Asmodee​

Bsmodee​

Csmodee​

 

[Von Ether]

You can't just create a sacrificial lamb in that the people loaning you money are expecting to get it back. My worry is that they'll eventually have to sell it off for parts in order to satisfy the creditors. I'm really curious as to what exactly in Asmodee's portfolio the creditors thought was worthy of being $900M in collateral. It's hard for me to believe that Asmodee's IP is worth that much but maybe?

"Selling for parts" was exactly what I meant by sacrificial lamb. At the very least, it seems keeping the other two companies alive is the priority here.

Embracer didn't license out Middle Earth to Fria Ligan - Sophisticated Games did. Sophisticated Games had a license from Middle Earth Enterprises from prior to their purchase by Embracer. Sophisticated moved the license from Cubicle 7 to Fria Ligan for One Ring in 2020 and Embracer didn't actually buy Middle Earth Enterprises from Saul Zaentz until 2022.

Ah. That now makes more sense. Thanks for the insight.

 

[Kyasanur]

Well, this isn’t looking good for the Star Wars RPG continuing. They are just now getting stuff straightened out and reprinted from the FFG to Edge switch.

I've been very disappointed with EDGE. Having forum interaction and some level of transparency with FFG to an ambiguous website and no development incite, did not sit well with me. It felt like they shelved Genysis, Star Wars, and L5R for the quick cash grab 5e titles. Sure it might seem like that is starting to shift to a better direction, but they are so opaque there is no telling what their plan is.

 

[innerdude]

The strategy seems pretty obvious from the outside.

The companies grouped with Asmodee are generally past their "prime earning" product years. You're going to see slow, stable revenue from them but very little innovation, very little "big bang" new product revenue (that's all going to come from the interactive side of the fence).

You're basically hedging the bet that Asmodee group can just sort of grind it out to net-positive profit or something close to it, hopefully reaching a revenue target to pay down debt structure, until the loan either gets called and you liquidate, or you restructure the loan against another short term horizon for payoff (18 or 24 months) where you just continue to grind away at it.

Saddling the debt to the slower, less innovative entity frees project capital for the interactive side rather than having to push money that could be put toward "home run" product releases against the debt.

I would be shocked if anything shuffled into the Asmodee group exists 5 years from now.

*Edit: To clarify, the product IPs will remain on the market. Catan isn't going anywhere. Ticket to Ride isn't going anywhere. Days of Wonder has multiple Board Game Geek Top 100 games that aren't going anywhere. But if the loan call horizon hits in 2025 and there's no foreseeable way to pay down the debt directly from the Asmodee group, it will definitely be vultures circling looking to pick off the most valuable properties one by one.

But it's interesting for sure. I imagine the Catan intellectual property alone is probably worth several hundred million.

 

[Lalato]

Over the last several years Asmodee gobbled up a bunch of tabletop gaming titles and companies/studios. Are there any companies in a position to purchase any of these titles remaining?