Enlarge / Claptrap keeps finding himself in wild new places. Now he's heading from Sweden's Embracer Group to New York City's Take-Two Interactive. Okay, maybe not that wild. (credit: Gearbox Interactive)

Embracer Group has been backing away from its all-encompassing position in the games industry lately. The latest divestment is Gearbox Entertainment, the studio behind the Borderlands series it bought in early 2021 for a deal that could have been worth up to $1.37 billion to Gearbox had it stayed inside the Swedish conglomerate's grasp.

The buyer is Take-Two Interactive Software , which had previously partnered with Gearbox on publishing Borderlands and other titles. Take-Two will issue new shares of its common stock to pay $460 million for Gearbox, to be completed before the end of June this year. Embracer paid $363 million in cash and stock for Gearbox in 2021 but promised up to $1 billion more should the developer hit earnings goals over six years.

"Today’s announcement marks the result of the final structured divestment process and is an important step in transforming Embracer into the future with notably lower net debt and improved free cash flow," said Embracer CEO Lars Wingefors in a statement intended to start nobody's imagination running.

Enlarge / Embrace the Embracer.

One of the last large independent game developers will no longer operate on its own, as Borderlands maker Gearbox Entertainment has merged with Swedish holding company Embracer Group. The Embracer conglomerate already encompasses dozens of mid-size game studios under brands like THQ Nordic, Saber Interactive, and Koch Media.

The deal is initially worth $363 million in cash and stock, a number that could grow by up to roughly $1 billion if Gearbox meets some ambitious earnings goals over the next six years. That represents quite the windfall for Gearbox's roughly 550 employees in Texas and Quebec, who have jointly owned the studio since its founding in 1999 and will now become significant shareholders in Embracer.

Under Embracer, Gearbox will continue to "operate as an independent studio" under the leadership of founder and CEO Randy Pitchford, the company said in a statement. Pitchford has been embroiled in a number of controversies in recent years over allegations of employee mistreatment , misappropriations of company funds , underpayment of talent , and even tales of leaving pornography at Medieval Times . Pitchford has denied these accusations.

Read 4 remaining paragraphs | Comments